Business Debt Help

Most of us know by now the economy is in the state it is in because of bad credit decisions.  The housing market crashed because banks were giving loans to people who shouldn’t have been approved for them and many people were racking up personal and business credit card debt.

But has anyone ever taken the time to look at the history of the credit card?  The following is a quick overview:

• The first credit card was the Diner’s Club card and it was made of card stock in 1950
• In 1958, American Express was the most widely used plastic credit card
• BankAmericard (now Visa) was the first general use card and allowed you to pay your balance over time which started in 1959
• Credit cards didn’t have their magnetic strip until 1970

Fast forward to 2010 and credit cards are everywhere.  There are some people who only use credit cards and don’t even carry cash anymore and as of 2009, “credit cards [were] responsible for more than $2.5 trillion in transactions a year and are accepted at more than 24 million locations in more than 200 countries and territories.”

But with credit cards come interest rates and many hidden fees.  It is very easy for someone to fall behind on a few payments and start racking up a large credit card bill.

Now there are consumer and business debt management programs to help aid people and businesses alike into controlling how they spend their money and help get people back on track.

So why is this important for you as a small business owner?

It’s simple, having good credit helps you be able to get loans from the bank.  Every business needs help from time to time, and knowing you can secure a bank loan is something every business owner should be able to do.

Banks are making it much harder to get a loan because of the state of the economy—and some businesses are turning to business cash advance companies for ways to get quick cash.

With that said, it is important to find reputable companies to help you manage your debt.  A debt management program can be your solution, but beware that there are many debt management and business loan scams out there.

The following are the three things NOT to do when you are pairing up with a business debt relief company:

1) Pay upfront fees

This is probably the most popular of the debt management scams.  Basically what happens is you are promised a loan to get you out of debt in no time and any other empty promise they can think of.

All you have to do is give them an upfront fee of X amount of dollars and you are in the clear! What actually happens is they take your money and you end up more in debt than when you started the whole mess. Remember that it is against the law for a company to charge you a fee for lending you money.

2) Believe them when they tell you they can improve your credit scores

Other companies will use the line that they will help you not only secure your debt, but they will be able to improve your credit scores.

This is not the case.  Using a debt management program to get you back on track with your finances is actually going to damage your credit score, just about as bad as filing for bankruptcy will.

3) Beware of not checking up with your creditors when these companies say they are paying them

These scams collect money from you, after they tell you they have talked to your creditors and have negotiated a price of X amount of dollars a month.

What they really do is wait to pay your balance in full–meanwhile your creditor is still waiting for your payment because they haven’t actually been notified.  You could potentially be brought to court by your credit card company.

Don’t let these scams deter you in looking for a debt resolution program. There are many reputable companies that can guide you in the right direction.  The main focus for your as a business owner is to make smart decisions with your money and for your company.

Keeping your credit score high and rebuilding credit is going to be the best option for any business owner in this economic climate and will make you less susceptible to these scams.  The government is making strides in trying to help you manage your debt with aid from the Credit Card Act of 2009, and new regulations from the FTC (which go into effect as of 2011) so there is hope for those of you who have accumulated some debt.

If you do incur some personal debt for whatever reasons there are options out there to help you.  Just be smart and look out for what not to do.  In certain situations it is good to know what not to do as well as what you need to do.

Securing your financial security will aid you in your journey of starting your business.  Credit card debt isn’t the end of the world–you just have to know what not to do.

About our guest author

Shannon Suetos is a writer on IP phone systems in San Diego, California. She writes extensively for an online resource that provides expert advice on purchasing and outsourcing decisions for small business owners and entrepreneurs such as VoIP business phone systems at Resource Nation.