Business Debt Help

Many are worrying about Debt and what business debt solutions there are?

Are you a business owner who has been affected by Covid-19 and struggling with cash flow?

Need business re-finance help or professional advice?

If you struggling to pay your bills we can assist with all solutions available.

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The best way to avoid financial trouble is to be proactive.

Business leaders should always have a plan for emergencies, and they should also be aware of the pitfalls that can lead to debt.

If you want information on how to deal with your money worries, continue reading for free debt advice!

What are business debts?

Business debt is when the money a company owes cannot be paid. A typical sign that a business is experiencing debt issues is when you do not have a steady stream of cash flow.

Debt doesn’t just mean money owed to a bank or credit card company, but also includes obligations such as payroll taxes and fines.

The best way to avoid business debts is by knowing exactly where your finances stand at all times.

When a business (or company) is unable to afford their expenses with what they bring in, there is a strong likelihood that they are experiencing debt.

Some debt specialists say a DTI higher than 35% is cause for serious concern, but it is always worth speaking to an independent insolvency company if you are concerned.

In a Limited company, debt is the responsibility of the company and not the individual.

Whereas if you are a sole trader, there may be debts incurred as an individual or through your business that carry personal liability.

A business that is in debt sounds negative but borrowing money is necessary for companies to thrive.

Debt can be essential, as it may even be a structured growth plan where borrowing some capital allows you to purchase new machinery. This could make the loan repayable once the machine starts generating revenue and producing cash.

If you are truly worried about being unable to pay back debts, then seek free debt advice from a debt advice charity, such as Money Advice Trust.

A short chat to an adviser could help you gain a better understanding of your business finances.

Common Types of Business Debt

The most common types of business debt include:

Options To Deal With Business Debt

When businesses are struggling there are many options available including:

  • Time To Pay Arrangement
  • Business Funding Options
  • Dealing With Creditors
  • Restructure / Debt Consolidation
  • Exit Strategy / Closing Company

Sole Trader Debts

A Sole Trader is a person who owns and operates their own business, which is not a Limited Company.

If you own a small business and are in debt, you can often find it tough to get out. You can’t separate your business and personal debts when you are a sole trader.

Even if you stop trading, you are still accountable for all company debts under a personal guarantee, which is treated the same as personal debts.

For small business owners like a sole trader, an IVA may be a viable personal debt solution for monthly payments as you a personally liable for any form of debt.

This contrasts with any debts limited companies incur when under financial distress.

If you are self-employed and have money worries you should get impartial advice via a free consultation.

Help with Business Debts

There are many licensed insolvency practitioners (IP) with experience tackling company debt problems for firms of every size.

The IPs can help a company director assess their business’s current situation and offer guidance on the available options to consider.

A thorough assessment will take place to evaluate if a rescue is feasible or if it has hit a point where closure may be necessary.

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You should always seek free debt advice from a debt advice charity, such as the Money Advice Trust, as they can offer helpful tips.

Most debt charities’ opening hours are Monday to Friday 9 AM to 5 PM, but make sure to check as this may vary.

A registered charity can offer independent debt advice, fact sheets, free resources, search feedback, and so much more.

Many charities can supply online services that aim to assist with important business debts and money worries.

Business Debt Solutions?

If your business is bankrupt, but the core of the company is viable, it may be possible to save the company while still allowing it to operate.

In these cases, certain commercial debt solutions are suitable:

Company Voluntary Arrangements (CVA)

A Company Voluntary Arrangement (CVA) might be a feasible debt solution for directors who feel that the company has potential and are willing to put in hard work to save it.

With a CVA, the company makes payment contributions in monthly instalments based on what they can afford to an Insolvency Practitioner (IP).

Check Out the Best CVA Companies

Company Administration

Business administration is an insolvency process that involves the management of an insolvent company being transferred to a licensed insolvency practitioner acting as administrator.

If your company debt has grown too large, the administration is something that can help.

It stalls creditors from taking further action and stops them from reclaiming their money.

The administration gives a business valuable time and legal protection to help steady the business, keeping it safe from creditor pressure and threats of winding-up action.

A company administration in the UK is a powerful tool as long as the conditions are right for all parties involved.

Re-Financing and Re-Structuring

Depending on your company’s situation, there are a variety of ways you may find it worthwhile to borrow.

For example, asset-based loans, invoice financing matters, and financial restructuring through loans are all possibilities.

If you’re the director of a company burdened with debt we strongly advise speaking to a professional debt advisor.

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Do you want to close the company?

You may have a business that is highly indebted and cannot continue trading or you simply want to move on.

If your company debt has grown to the point where prospects for recovery are slim, the dismissal of a company in Creditors Voluntary Liquidation (CVL) may be the way to go.

A CVL can prevent further losses to creditors as well as save directors from being subject to Wrongful Trading actions.

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Do you want to restart the company?

Sometimes it is not feasible to keep the company going and it needs to be transferred under a different business.

It’s often better for a business to sell off its assets or equipment from an old company, but this option might not be available in the event that creditors won’t allow it.

What would happen if the old company fails is question will depend on factors such as whether pre-pack liquidation is allowed.

What is Money Advice Trust?

The Money Advice Trust is a national charity that helps people across the UK to tackle their personal debts and manage their money with confidence.

Speak to a licensed Money Advice Trust insolvency practitioner for free advice on the best avenue to get out of debt today.

Money Advice Trust can provide expert advice to small business owners who are self-employed but struggling with outstanding loans, so get in touch today.

All the best insolvency companies listed are part of the insolvency practitioners association and can be trusted with your business finances.

Interested In Finding Out More About Your Options?

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Types Of Business Debts

There are many types of creditors you might owe money to as a business.

Here are the most popular business debt types.

HMRC Debts

HMRC debt is any unpaid bills that you owe to Her Majesty’s Revenue and Customs.

Your HMRC debt could include outstanding income tax (PAYE), National Insurance payments, or VAT arrears.

Any debts that you owe to HMRC are deemed priority debts, and failure to make your repayments could result in court action.

Check out our guide if you are struggling to pay HMRC Tax Bills.

PAYE Debts

Pay as You Earn debts are arrears in relation to your PAYE payments to HMRC.

If you fail to pay your full PAYE debts within 30 days, you receive a 5% penalty.

At 6 months unpaid, you receive a 10% penalty, and at 12 months unpaid, you receive a 15% penalty.

To avoid having PAYE debts stack up, make sure you pay back the full amount owed as soon as you can.

Check out our guide if you are struggling to pay PAYE debts.

VAT Debts

Value Added Tax, or VAT, is tax payments tied to the sales of products or services.

VAT is an indirect tax that businesses owe to HMRC. By adding VAT onto their products they can send the additional funds straight to the government.

If you fail to make your payments your account will default and you will fall into a ‘surcharge period’.

Check out our guide if you are struggling to pay VAT debts.

Business Bank Overdraft Debts

You can access overdrafts for your business with various banks, it’s a form of credit that allows you to access short-term cash flow.

With a business overdraft, you are only charged on the interest of your loan.

An overdraft is deemed non-priority, however, it is still important to pay back any loans.

Check out our guide if you are struggling to pay overdraft debts.

Business Credit Card Debts

When you fall behind with your business credit card payments you will be given a late charge, meaning your APR can increase.

If you have credit card debts, then you may be stressed and wondering where you can get help.

Check out our guide if you are struggling to pay credit card debt.

Suppliers

A supplier payment is when a business purchases products or services from an external vendor.

Failure to meet supplier bills could result in the liquidation of your company, so it is crucial that you keep up with your payments.

Check out our guide if you are struggling to pay suppliers.

Commercial Rent Debts

You may be a tenant that is concerned that you will be unable to make your rent payments.

If this is the case, speak with your landlord and a debt advisory service, such as Citizens Advice.

New commercial rent laws were introduced as an outcome of the pandemic. They provided a legal pathway to collect outstanding commercial rent debts.

Check out our guide if you are struggling to pay Commercial Rent arrears.

Coronavirus Business Interruption Loan Scheme

The CBILS was set up to help small businesses access funding of up to £5 million, throughout the pandemic.

The UK government offers 80% of the funding to the business and will pay the interest and charges for the first 12 months.

Please be aware that this scheme was only available up until 31st March 2021.

Check out our guide if you are struggling to pay Coronavirus Business Interruption Loan debts.

Bounce Back Loan Debts

The BBL scheme was introduced amind the COVID-19 pandemic, to enable small companies to access emergency funds.

The loan allowed the businesses to borrow from £2K to £50K, to pay wages.

If you cannot meet your BBL repayments, then the company is liable for any arrears, not you personally.

Check out our guide if you are struggling to pay bounce back loan debts.

Business Debt Solutions

When struggling to pay business debts you need to take professional debt advice on your next steps.

There are many options from company restructuring, refinancing to closing down your business.

Check out all the different business loan solutions here:

Creditor’s Voluntary Liquidation (CVL)

A CVL is a process in which a business’s assets are liquidated to enable them to pay its lender’s debts.

You can access a Creditor’s Voluntary Liquidation if at least 75% of your shareholders agree to one.

Once you enter a CVL you will be appointed a licensed insolvency practitioner (IP) that will handle your case.

Your insolvency practitioner will keep you informed on your asset sales.

Creditors’ debts are repaid from asset sales in the official hierarchy. Any outstanding debts will then be struck off.

Check out our list of the best CVL companies!

Company Voluntary Arrangements (CVA)

A Company Voluntary Arrangement (CVA) might be a feasible debt solution for directors who feel that the company has potential and are willing to put in hard work to save it.

With a CVA, the company makes payment contributions in monthly instalments based on what they can afford to an Insolvency Practitioner (IP).

CVAs typically last between 3 to 5 years. After such time, the remaining debt may be written off.

Check Out the Best CVA Companies

Company Administration

Business administration is an insolvency process that involves the management of an insolvent company being transferred to a licensed insolvency practitioner acting as administrator.

If your company debt has grown too large, then administration is something that can help.

It stalls creditors from taking further action and stops them from reclaiming their money.

The administration gives a business valuable time and legal protection to help steady the business, keeping it safe from creditor pressure and threats of winding-up action.

A company administration in the UK is a powerful tool as long as the conditions are right for all parties involved.

Re-Financing and Re-Structuring

Depending on your company’s situation, there are a variety of ways you may find it worthwhile to borrow.

For example, asset-based loans, invoice financing matters, and financial restructuring through loans are all possibilities.

Re-financing and re-structuring your company could negatively impact your credit score.

If you’re the director of a company burdened with debt we strongly advise speaking to a professional debt advisor.

Member’s Voluntary Liquidation (MVL)

An MVL is a legally-binding process by which a solvent company is closed down.

A licensed insolvency practitioner (IP) handles your company’s assets and will send funds to your lenders.

The liquidator will finalise the formalities and obtain clearance from Her Majesty’s Revenue and Customs, then your company can be dissolved.

Once the liquidation process has begun the company will be taken off the companies register.

You can find the best MVL companies on our list.

Dissolution

The process of dissolving a company refers to the stages taken to get a business removed from the Companies House register.

If the directors of a company have concluded they are no longer in a viable position to trade, then dissolution can be the best route.

Dissolution can be voluntary or involuntary. Voluntary dissolution is when the company’s directors decide to dissolve their firm and involuntary is when a company is forced into dissolution as a result of unpaid debts.

Have a look at the best dissolution agencies today!

Invoice Factoring

Invoice factoring is a kind of invoice financing that allows companies to gain instant payment, rather than waiting to receive funds.

A factoring lender can provide your company with capital against your client’s invoices.

The most popular aspect of invoice factoring is that it falls onto the factoring company to chase outstanding payments.

Invoice factoring can help you pay back loans and help you keep cash flow consistent.

Find the best invoice factoring company for you by reading our article.

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Summary

If you’re suffering from company debt, there are several different avenues to repay creditors and help the company recover.

This includes restructuring via administration, refinancing, proposing a Company Voluntary Arrangement or a Time to Pay Arrangement.

Alternatively, if there is little to no chance of rescuing the company then it can be closed by a CVL debt solution.

If you are having financial difficulties, get in touch with a specialist today for a free initial consultation. They can discuss the best insolvency solution which will most benefit you.

Debt problems don’t have to take over your life. The first step is accessing debt advice!

Tackle your company debt problems now.

All UK Insolvency Practitioners

Here is a full list of Insolvency Practitioners in the UK who professional debt help and confidential advice:

The insolvency practitioner list above gives you plenty of options to choose the best debt help firm in December 2023.

Business Debt Help

Speak to the professional business advisor to check what business finance solutions you have.

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