The recession that hit Canada in 2008 forced many Canadian businesses to make some very difficult decisions. For many, the recession came out of nowhere. When consumers stop spending, a seemingly prosperous business can quickly fall flat.
To survive, some businesses were forced to cut back. Laying off staff, implementing a hiring freeze and reducing spending on business expenses are a few examples of ways that businesses tried to survive. Other small business owners relied on credit to make ends meet and they are still suffering the consequences today.
For most, starting a business is a dream. Many individuals who start their own businesses invest everything into this dream. When things are going well you may be on top of the world, but when things take a turn for the worse, your business can quickly become the source of incredible stress. At this point the stress will begin to consume all of your time, energy and credit.
So what options exist in Ontario for small business owners who find themselves in debt and in financial trouble?
If you are a small business owner who has found yourself in financial trouble, you may have already realized that debt-financing options are scarce. Many banks will not lend to those small businesses who:
1. Have been in business for less than 2 years.
2. Have issues with their receivables (invoices that come in more than 60 days from the date of issue).
3. Cannot show good net business income on at least 2 years on consecutive business income tax returns.
4. Are looking for financial help because the business is struggling.
That is why many small business owners who are seeking debt help options in Ontario find themselves putting their company’s debt on their personal credit. Some max out their personal credit cards, and others go as far as refinancing the equity out of their homes in an effort to see their small business (their dream) survive. This doesn’t often work and blurs the line between an individual’s business and family because suddenly everything is at stake.
There are debt help options in Ontario for small business owners and for individuals who are stretched to their limits. These options often do not involve filing for bankruptcy. You will not access these resources through your bank. If you have found yourself in this situation, the best thing that you can do is establish a relationship with a good Financial Advisor, one who has experience working with small business owners who have found themselves in debt.
Take a step back and you will realize that more credit may not be the answer. Tough times call for tough financial decisions and you do not have to make these decisions on your own.