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Los Angeles California Bankruptcy Blog

New Chapter 11 process for small businesses proposed

Chapter 11 bankruptcy can provide an important route forward for businesses that are struggling with debt. However, companies can encounter challenges when it comes to pursuing this route. Some argue that this may especially be the case for small businesses.

Arguments have been leveled that the current Chapter 11 system here in the U.S. isn’t well-designed for smaller companies. Worries over the costs and ownership implications of the Chapter 11 process may be leading some small business owners to stay away from this bankruptcy option.

How can a confession of judgment hurt my business?

Entrepreneurs have fallen victim to a growing scam that uses a legal document as a weapon to strip away funds from growing companies. The fraud also relies on the New York court system and an owner’s eagerness to expand into new markets.

Bloomberg Businessweek reported a recent situation with a Floridian couple, the Duncans, who worked with a New York lender for a small business loan. Although they continued to make payments on time, they eventually lost over $52,000 from their bank account.

New lending scheme targets, destroys small businesses

A predatory lending scheme that has blossomed in the past two years has been generating billions of dollars for the lending companies, millions for the agencies that enable the scheme and has driven thousands of small businesses across the country out of business.

The epicenter is New York, where an arcane method of collecting debts has been used and abused by cash advance companies to freeze and drain bank accounts of businesses from Alaska to Florida.

What is loan stacking and why can it be a problem?

Small business owners sometimes encounter challenges when it comes to getting financing for their company. For example, they might not get approved for as big of a loan from the bank as they were hoping for. When this happens, some business owners might be tempted to stack loans.

Loan stacking, generally, is when a business takes out loans from multiple lenders to try to get a certain amount of financing. It is important for business owners who are thinking about loan stacking to understand its risks.

The pluses and minuses of the holiday season for small businesses

The last part of the year, including the holiday season, can be a very impactful time for small businesses.

For one, this time of the year can be full of opportunities for a company. A recent survey of 300 small companies indicated that, for many different types of businesses, it is pretty common for the year’s final quarter to be the most profitable. Given the high level of shopping over the holiday season, it might not be too surprising to hear that retailers were among the businesses especially likely to report that the fourth quarter of the year saw the most profits.

How much business debt is too much?

Debt can serve some very important purposes for businesses. For many companies, it can be a critical source of financing for getting off of the ground or growing. In a 2017 survey, around 77 percent of polled small business executives pointed to money from financial institutions as being important for small business success.

However, if business debt becomes overwhelming, it can quickly turn from a help to a hindrance. Debt problems could endanger a wide range of goals business owners may have regarding their company.

Can you keep your business if you file bankruptcy?

Filing bankruptcy can be an extremely difficult time for businesses. Will the business be able to stay open? Will employees be laid off? These questions can be overwhelming and depend on which type of bankruptcy a business chooses.

For businesses, there are three potential bankruptcy options that will determine whether a business will remain open.

The basics of business lines of credit

Businesses can have a wide range of capital needs. Sometimes, companies will turn to credit to meet these needs. There are a range of different credit options businesses can have. One is a business line of credit.

This is an arrangement a company reaches with a lender in which a certain credit limit is set. The business can then, generally, borrow money from the lender up to this limit at any time while the line of credit is still open. When money is borrowed, it is treated as a loan.

How do I know if Chapter 11 is right for me?

Your business has been struggling, and you now have debt that seems insurmountable. You have considered filing Chapter 11 bankruptcy, but you do not know if it is the right choice for you. Bankruptcy is a very useful tool for individuals and businesses that wish to discharge their debts and start over with a clean slate. If you are wondering whether to file Chapter 11, these are a few ways to determine whether this option is right for you.

Financing missteps can lead to debt problems for startups

It is very common for entrepreneurs here in California to turn to financing to help with the costs of getting a startup up and running. What decisions startup owners make regarding financing can have long-term implications for their company.

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