It is surprising how many business people allow themselves to get to the point where they have absolutely no cash in the bank at all before they reach out for help. In many cases, hope, or hope for the positive actions of another, may account for this circumstance. But, in almost every case what has really happened is that a business has made a series of small decisions that have added up to a complete lack of cash. No cash in means no cash out, which ultimately means no business.
In come the internet lenders. An entire class of lenders have arisen that offer click to sign, no credit check, cash on the fly deposited to your account tomorrow. When you learn that they will automatically withdraw payments, and that they will only charge a fee, not an interest rate, it seems that all of the problems are solved. Of course, nothing could be further from the truth.
Internet lenders who provide fast cash do so at a rate higher than the gross profit margins of most small businesses. In other words, borrowing money from these lenders can mean that every sale you make is made at a loss! Of course, you have to know your gross profit margin to know if the loan exceeds that threshold. Not knowing that one number can lead to disaster on many levels.
The moral to this story is that the time to seek out help reorganizing your affairs is when you first start experiencing cash flow problems not when seeking help is the LAST resort. In most cases, if Bankruptcy is your last resort it will be a liquidation or a sale and NOT a reorganization. In fact, since most bankruptcy attorneys do not work for free, you will need at least enough cash in the bank to pay a descent retainer.
This article is written by an attorney at Wyatt & Mirabella, PC. Always consult an attorney before making any legal decisions. To make an appointment today for a free consultation, please click here to contact us.