Most businesses owe money in one way or the other. It can be through the start up loan that helped turn the business idea into a reality. It can be through the payables that are scheduled to be paid off in 30, 60 or 90 days after the purchase had been made or the service given. Whatever it is, debt will always be something that entrepreneurs should know how to handle.

In some cases, a severe economic turn, a bad investment or a drastic change in the market’s perspective can jeopardize the financial state of a small business. This could leave the business owner with more debt and overhead to pay compared to the revenues coming in. If this is the scenario, what are the options of the small business to get out of debt?

One of the first options that entrepreneurs consider is debt financing. It simply implies that the small business will get financial aid, either from a bank or any financial institution that is in the business of doing such transactions.

Some finance experts will say that a debt taken to help grow one’s personal wealth is a smart debt to take. If it will help you business survive a financial crisis and keep it away from bankruptcy, then it is worth a shot. To help you decide if this is the right course, here are some benefits to debt financing.

The first and probably the best thing about this small business debt relief is you get to stay as the owner of your company. If you will not file for bankruptcy, you keep the company open and you have the chance to revive your profits. You retain full control in your business.

Another benefit is you stay as the primary decision maker when it comes to where the money you loaned will be spent. You can decide to solely spend it on your payables or you can set it aside for your monthly overhead. Or you can split it between the two. Of course, that will have to be thought out carefully in your debt relief plan and not just something that you decide on a whim.

Yet another reason for you to consider debt financing is the fact that your accountability to the lender will only be temporary. As soon as you finish paying off the loan amount, your transaction ends. The lender will have no interest as to what the loan have done to your company. If it led to a hefty amount of profit or got your business to skyrocket its profits, all those will be on you. Only you and the company will enjoy the fruits of that debt financing.

Lastly, this type of small business debt relief will allow you to boost the credit rating of your company. At least, this will happen if you pay off your debt diligently. Despite the huge amount of debt, if you are able to keep up with your payments, that will lead to a good financial history for the business. That means you can get a good deal out of another loan in case your business will need it again.

If you own a small business, you can expect a couple of debts to haunt you. This is a normal occurrence. From the moment you get a start up loan for the business, you are already in debt. The only difference with consumer debt is that any loan that you take for you business should help pay for itself. Your business generates revenues and any loan you take should be to improve that money making quality.

However, there are instances wherein the debt payments can no longer be supported by the revenues. That means you have to start considering debt relief options.

There are government programs that you can look into. The great thing about these programs is the fact that you can get lower than the usual interest rates. You can search through Grants.gov to provide you with options on what grants you can avail from the Federal government. These include mostly small business startup loans but they can also provide guarantees for debt assistance loans.

Part of the ARRA or American Recovery and Reinvestment Act of 2009 states that tax relief are available for companies who are trying to cut back losses in order to cope with mounting debt. This is something that small business owners may want to look into. Apart from that, it provided over $700 million in funds for SBA loans.

You should also know that whatever you can use in consumer debt can be applied in small business too. You can opt for debt consolidation loans or debt settlement. Of course, bankruptcy is also an option but this should be your last resort. All of these small business debt relief options can be effective for certain financial situations.

In debt consolidation loans, the idea remains the same - you take out a big loan to cover for your other credit obligations. The idea is to stretch your loan longer so you get to pay smaller monthly payments. As your debt payment becomes smaller, you free up more funds to invest them in campaigns and strategies that will help increase the revenues of your business.

Debt settlement is also an option that you can look into. Since a lot of small business entrepreneurs function as sole proprietors, they can qualify either as individual consumers or as a business owner. They get to enroll in a program wherein the debt settlement expert will review the financial capabilities of the business to consider how much it can pay their debts while having enough to cover for the overhead expenses. They will negotiate with the creditors on their behalf so the debt is reduced and the penalty charges are waived off.

The last option that small business owners face is bankruptcy. There is a specific chapter known as the Chapter 11 bankruptcy that entrepreneurs can file. It is also known as the Reorganization bankruptcy and it will allow small businesses in debt to get loans with favorable interest rates. These loans will help them stay afloat. It is no longer true that filing for bankruptcy will result in the closure of the company. It is important that you approach bankruptcy carefully as it does pose a significant impact on one’s credit score - specially for sole proprietorship businesses. Consult a bankruptcy lawyer before you proceed so you can identify if this is the best course for you to take.

Ultimately, you should know that debt relief is not enough to solve your problem. You need to check your business processes, audit financial books and see through your products and services to determine why your revenues cannot cover both overhead expenses and debt payments. You may have to consider revising some areas in your company to avoid being in the same situation again.