Why is Patriot Funding Accused of Being a Debt Consolidation Scam?
Patriot Funding has been reviewed by Crixeo, the popular news and reviews site, for being part of a long-running debt consolidation and credit card relief scam. According to Crixeo:
“The story is the same. They lure you in by sending you direct mail with a “personalized invitation code” and a low 3%-4% interest rate to consolidate your high-interest credit card debt. You will be directed to Patriot Funding Review or My Patriot Funding More than likely you will not qualify for one of their credit card consolidation loans and they will try and flip you into a more expensive debt settlement product.”
Ed Miles, crixeo.com
It’s not uncommon for owners of small businesses to use credit cards for their day to day activities. These cards may also be used to pay bills or to invest in future growth for the business. However, using these cards excessively may result in large amounts of debt.
Getting out of debt can be a challenge when finances are tight and your expenditures are high. Business owners will need to make some changes to their operations and spending habits if they wish to get out of debt, and safeguard their venture during recessions.
Before we get into the different strategies for tackling your business debt, it’s worth learning about business credit card balances and the challenges it brings with it.
Business Debt Is More Common than You’d Think
Business owners that are dealing with debt from their credit card usage may believe that they are alone in their predicament. However, business debt is frequent for owners of small and medium sized businesses. It’s not uncommon for business owners to take out loans or use a high percentage of their credit limit during routine operations or under special circumstances.
According to an annual Small Business Credit Survey, 70% of small employer firms have outstanding debt. This means your small business is more likely to have debt than not.
That isn’t to say that business debt should be taken lightly. Amassing a large debt that remains unpaid for a long period can damage your credit score, and make it difficult to be granted loans in the future. For this reason, business owners should find ways to tackle their debt before it gets out of hand.
Sources of Small Business Debt
Small business debt frequently occurs due to excessive credit card usage. After all, many business owners use these cards regularly.
One would normally frown on the idea of taking on debt. However, debt may be necessary for achieving the business’s future goals. This may be the case if the business owner is taking out a loan or swiping their credit card to invest back into their business and help it grow.
How Are Business Credit Cards Acquired?
Getting a business credit card enables business owners to build credit using their business’s name. However, to actually qualify for a business credit card, the business owner will need to possess a good credit score.
This means creditors can go after business owners when the business has outstanding debts. Some people believe that they will be protected in such situations if they have a limited liability company. However, if you have co-signed for a business loan, you may be held liable when it is not paid back.
In these situations, business owners will need to find ways to pay back the business debt themselves. Luckily, there are many strategies to help them with this goal.
Getting Out Of Business Debt
Getting out of business debt is arguably more difficult than getting into debt in the first place. However, it can be done with perseverance and using the right strategy. Some methods for getting out of business debt include:
Cutting Back on Spending
No business owner wants to cut back on their expenditures, especially if they have been deemed necessary. However, you will have to make some sacrifices to get out of debt. That being said, there are always ways to cut back on your business spending.
Some business owners purchase supplies in bulk to get discounts, while others cut back on operating hours to save on labor costs. Spend some time assessing all the expenditures for your business and find places where you can trim a few dollars.
Try Increasing your Profits
Telling business owners to increase their profits sounds like a strange concept. After all, every business owner has the goal of maximizing their profits. However, not all business owners take profit-maximizing steps in their business.
If you have any low-profit earning products, they should be temporarily halted in favor of high-profit earning ones. Similarly, you may be able to get away with raising prices on some of your most popular products or services.
Build Up Cash Reserves
Business owners should strive to make the minimum payment on their debts. However, it may also be useful to delay spending on large purchases or investments. This enables them to amass more cash reserves, which can be used to make smarter financial decisions during a recession.
Debt Management Strategies
Business owners that are struggling to pay off their debt may need to turn to debt consolidation strategies or debt cancellation. Each of these approaches comes with their own advantages and drawbacks, so they will need to choose wisely.
If business owners have multiple high interest debts, they may be able to use a credit card consolidation program or debt consolidation to their advantage. This involves taking out a small business administration loan and using it to pay off their existing debts. This essentially combines their multiple debts into a single one with a lower interest rate and a more manageable payback period.
Business owners may be able to buy themselves more time by using balance transfers. Many card companies offer special balance transfer cards onto which users can transfer their debt. These cards charge 0% APR for a special 12 to 18 month promotional period.
If business owners can pay back their debts during this promotional period, they can get away with paying no interest. However, if they fail to pay off the balance in time, they will be charged a high interest rate on the remaining amount.
Debt settlement is another option for business owners with no way to pay back their debt. This usually involves negotiating with the lender and asking them to accept a payment that is less than the full debt amount. If the lender believes you cannot pay back your debt, they may accept your offer. The downside of using this approach is that it may damage your credit score.
The aforementioned strategies should be useful for business owners who are struggling with debt. It’s important to weigh up the pros and cons of each option before choosing one, as it may impact the future success of your business.