(Last Updated On: April 11, 2019)

image of person who is a winner after defaulting on business debt


Defaulting on your business debt is the one thing that can make you feel like a loser. And in the worst way. I know this first hand.


One of the businesses I started was going to be the winner.


I had done the market research, wrote the super business plan and I even took my dream car for a spin in my imagination.


The lenders were as impressed with me as I was with myself. A few hiccups apart, I acquired the required business debt and I was on my way.


And then...gradually, and certainly without warning...I couldn’t keep up with the payments. It wasn’t a single factor that led to this but a combination of them...27 of them, by my analysis.


Before I knew it, just so! I was $100,000 in business debt! *&%@?#! I had to close the business to “stop it from eating what it did not cook!”


Suddenly, underneath the bed with the dust and the forgotten shoes seemed like a safe and welcome space for me to spend the rest of my life.


I was too frightened to open my mail. I just didn’t want to know the extent of my debt. Neither did I want to deal with any legal threats and requests for payment that came through the mail or by phone...


My business debt was turning me into a loser. It was crippling me. But if it was, it was doing so with my complete permission...


You see, you can default on your business debt and still come out as a winner, and with your self-esteem intact.


As a matter of fact, your business success and your professional development requires that you navigate such difficult waters.


And I want to show you how...                                                                                                                                                                                                                                

  1. Don’t let your business debt cripple your self-esteem

When you acted on your dream and borrowed money to establish your business, you placed yourself in that small percentage of people who actually take action towards their goals.


You were bold, you took risks, you kicked butt and you made things happen. You took on some business debt with every intention to pay it back. And for a while you did. You were confident and your self-esteem was high.


You were the consummate entrepreneur!


And then the circumstances changed. Maybe you made a bad decision. Or your main customer went out of business or there was a downturn in the economy. Whatever the reason, you can no longer meet your commitments.


Now you feel like a complete failure.


When you cannot repay your debt, you are not a failure or a thief. But that’s how the people you owe behave. That’s what those who envy you want you to believe.


But you are the same bold, confident entrepreneur who started the business!


As long as you keep your confidence and self-esteem intact, you will get a grip on your situation faster, and be able to address it in creative and unexpected ways.


  1. Explore how you reached where you cannot pay

 There are many reasons why you will find yourself in a position where you cannot repay a loan. Here is a partial list:

  • The business was undercapitalized from the start
  • The lag time between idea and action was too long
  • You started taking too much money out of the business too early
  • You had only one “big” customer who no longer require your services
  • You have poor money management skills
  • You are too “clever” by far for your own good
  • You simply do not understand the business of being in business


When you know how you reach where you are, you give yourself a strong foundation from which to come up with strategies for fixing the problem.


  1. Take responsibility for fixing the problem

It is easy to claim that it’s not your fault that you find yourself in a position where you cannot repay your business debt. And chances are, you might be right, but that will not get you out of debt.


For example, 90% of the reason I ran into problems repaying my business debt was not my fault. Due to circumstances completely beyond my control, the lag time between my idea and the implementation was too long.


In simple terms, the longer the time between when you start working on your idea and when you get it up and running, the higher your chances are of failing.


This was exactly my problem. By the time my loan was finally approved, so much of what that decision was made on had changed.


If I was half the business woman then that I am now, what would I have done differently? I would’ve removed my petty ego from the mix and walk away from that loan and that business.


Be willing to break the rules and win because hiding from your creditors is not really an option. And do find ways to grow your business without money.


  1. Negotiate a settlement – you’re still open to business

I’ve said it before and I’m saying it again. As a small business person, your biggest problem is not access to finance. It’s lack of effective negotiation skills.


With effective negotiation skills, you can negotiate anything – including your way out of default on your business debt.


While this is a book in itself, here are just a few tips to help you:

  • Do not negotiate from a position of shame and fear. Negotiate from a position of a business person, making a business deal
  • Be confident and positive but never cocky
  • Be clear about the outcome you want with regards to addressing your default
  • Do your homework – know how receptive your creditors will be to your desired outcome. Or which alternative outcome they might favour
  • How you dress matters. Dress like a frightened loser and expect to be treated like a frightened loser
  • Be prepared to walk away if you cannot get an agreement that helps your situation. Yes!)


  1. Allow other people to help you repay your debt

I’m serious about this.


Perhaps you’re not someone who believes in asking friends and family for favours, especially money favours. And you may even be proud of this too.


But dire circumstances require unusual responses.


If you reject the help of friends who come together and pool their resources to help you, you are really rejecting the love and attention of people who care for you.


 In reality, it’s an opportunity for you to make another business deal. Use your negotiating skills to broker a payback deal that leaves your pride and your friendships intact.


Now over to you...

By now I hope I have convinced you that defaulting on your business debt is not the end of your entrepreneurial journey. As a matter of fact, to me it’s but a flat tyre on that journey.


Even if you have not defaulted on a loan, use the information to prepare yourself for such an eventuality. If you do and it ever happens to you, you WILL come out as a winner.


Now help your friends prepare themselves by sharing this information.


When you do, remember, to impress upon them that to succeed in business you have to be tough, you have to be confident and you have to continuously develop yourself.


To your success with your business debt... 

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How to Be a Winner When You Default on Your Business Debt

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Lorna Barrow

Lorna Barrow is a Business Breakthrough Specialist, an easy-to-read Writer, an unfiltered Transformational Speaker and a self-confessed Small Business Junkie. She uses her crazy personality and vast business experience to connect with small business owners and entrepreneurs. Then she helps them to acquire the skills and confidence they need to make a BIG impact with their businesses. Get her FREE Fast Learning Resource "7 Unique Skills to Make a BIG impact In Business!" and kickstart your BIG impact!

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