Harrison Funding is offering 3.03% a APR loan offers that are simply unrealistic unless you have excellent credit. Crixeo, the popular news and review site, has done a review of Harrison Funding and is still waiting to hear from someone who has been approved with an interest rate this low. Or Is it simply part of a long-running bait and switch scam?
According to Ed Miles of Crixeo, “The story is the same. Harrison Funding lures you in by sending you direct mail with a “personalized invitation code” and a low 3.03% APR to consolidate your high-interest credit card debt into a new personal loan. You will be directed to the My Harrison Funding website. More than likely you will not qualify for one of their personal loan offers and they will try and flip you into a more expensive debt product.
Business owners, particularly those with small-scale businesses, often rely on credit cards to finance their growth and pay the bills. However, in challenging economic situations, paying off business credit card debt can become quite difficult. If you’ve been struggling to manage your credit card debt, it’s probably time to make some significant adjustments to your business operations and financial management. It will offer your company more stability to make it past the recession and continue succeeding further.
In this blog, we will cover all the vital things to know about business credit card debt and how you should manage it to keep your company financially stable and even get coronavirus credit relief.
Business Debt is a Common Practice
The very first thing you should realize is that this type of debt is actually quite common. If you’re carrying a particular amount of business debt, well you’re not the only one. Business owners around the world take out loans from the bank or run up their credit card balance to pay for big expenses, investments for future growth, any shortfalls in the business cash flow etc.
A 2020 Small Business Credit Survey conducted by the Federal Reserve revealed that 68% of small businesses have a debt of up to $100,000. Only 29% of businesses are debt-free. This makes small business credit cards some of the most commonly used methods of debt financing.
The survey also showed that 53% of these small businesses use their credit cards for daily transactions as well.
You shouldn’t feel poorly for having business debt. This borrowed money allows you to achieve increased business growth and helps manage the everyday ups and downs of cash flow. Furthermore, this debt will allow you to manage your business finances better and invest in future expansions.
However, if you find yourself often missing the payments of your business debt bills or your debt levels are becoming too high, then it’s time to make some adjustments.
Business Debts Come with a Personal Guarantee
Most small business owners start their companies by getting a small business credit card. It gives them the capital they need to kickstart their business. But, to qualify for this credit card, banks usually require the business owners to give a personal guarantee. You will need to use your personal credit score to get a small business credit card.
This means that credit card issues can legally pursue you to repay the debts of your business personally. It applies even if you have the corporate protection of an LLC or any other legal business entity to protect your personal assets.
The survey mentioned above also found that 88% of small businesses secure financing by relying on the owner’s personal credit score. While having a personal guarantee or using personal credit scores can help you in qualifying for a small business credit card, it comes with its cons, too. You will no longer be able to keep your personal finances and business separate.
If your business suffers loss or a setback, making you unable to make the repayments, you as the owner will be directly liable for those debts. It might even cost you your own money, so be prepared for such circumstances.
Getting Out of Business Debt
Getting stuck in a cycle of debt, especially when your personal assets are at stake, can be disastrous for any business owner. Have you been struggling to make your debt repayments or manage the business debt properly? Perhaps your business is surviving for now, but you still feel the need for more stable finances. In either case, you should take these steps to get out of business debt ASAP.
1. Cut Back on Your Business Spending
Look over how much you’re spending on non-essential items each month. Maybe there is some unused office space you can cut back on or find a cheaper vendor for your inventory (without compromising on the quality, of course). Try to find some means of reducing your total business operations spending per month.
2. Improve the Profitability of Your Business
Amidst tough economic situations, you are in the best position to aggressively change your business operations in terms of better financial profitability. Maybe you can eliminate some underperforming product lines or services that aren’t bringing in sufficient profits. Perhaps the prices of some product lines can be increased, or package deals offered to attract more customers. Be sure to maintain a healthy profit margin as you go about making these changes.
3. Increase Your Business’ Cash Reserves
A recession can be quite beneficial for your business. Firstly, it ensures you pay minimal amounts on your business credit cards, loans or lines of credit. Secondly, it offers the perfect opportunity for you to boost your business’ cash reserves.
Try to delay making any big purchases or investments till you have at least a couple of months’ worth of cash in the bank. If you contribute to SEP-IRA or any other retirement savings plan, try to hold off adding money to the retirement investments and instead utilize it for your business cash reserves. Doing so will make your business debts a lot more manageable.
Additionally, having cash in hand allows financial security and will lead you to make better financial decisions in times of uncertainty.
4. Get Faster Payments
Small business owners are often too lenient when it comes to getting paid by their customers. Remember that it is okay to ask your current customers for improved payment terms. If you’ve been offering 60-day terms on your invoices, try bringing it down to 30-day terms.
Once you have a loyal customer base, they will be willing to pay you faster. You can further encourage quicker payments by offering small discounts or bonuses.
When you get paid faster, it improves your cash flow and boosts your cash-in-hand. Thus, you will have the money to pay off your business debts and make future predictions.
The Final Word
Recessions can sometimes be an ideal opportunity to alter your business operations and improve your finances. Your customers will still want to spend money on your business, but how they wish to spend this money may change. Always keep a close eye on customer behavior and make appropriate changes to the business to accommodate them.
Lastly, if your business continues to suffer from the revenues not bouncing back, it may be time to take more drastic actions. You can consider options such as debt settlement or declaring bankruptcy to protect your rights and start anew.