A History Of Growing Trust In Kentucky

Managing business debt: strategies for Kentucky business owners

On Behalf of | May 17, 2024 | business law

Navigating business debt is hard for any owner. Understanding the legal options available can help manage financial burdens. It’s important to understand which strategies best address your business debt before you take action.

Understanding debt restructuring

Debt restructuring gives businesses the option to negotiate new terms with creditors. It makes debt more manageable.

  • Extending the repayment period: lowers monthly payments.
  • Lowering interest rates: can reduce the total amount owed.
  • Equity conversion: Some creditors might agree to convert a part of the debt into equity.

Exploring bankruptcy options

There are two main types of bankruptcy relevant to businesses: Chapter 7 and Chapter 11. Chapter 7 bankruptcy involves liquidating assets to pay off creditors. It is suitable for businesses that are no longer viable. Chapter 11 bankruptcy allows businesses to continue operating while restructuring their debt.

Utilizing state-specific programs

Kentucky offers various programs to assist businesses in financial distress: The Kentucky Small Business Credit Initiative (KSBCI) offers loan support to small businesses. It helps them get financing and manage debt. The Kentucky Business Investment Program (KBI) provides tax incentives for businesses making big investments.

Protecting personal assets

It’s crucial to protect personal assets when dealing with business debt. Business owners can protect their personal assets by forming an LLC or using a trust. Both options protect personal assets from business liabilities.

Kentucky business owners have many tools available to improve cash flow and reduce debt. Taking proactive steps and staying informed can help businesses better deal with debt and get their business back into the black.