Long Beach Corporate Bankruptcy Still a Reality for Many Small Businesses
April 16, 2012
A Long Beach corporate bankruptcy may be necessary for small firms that are seeing incremental gains and expanding debt.
Long Beach business bankruptcy attorneys know that stagnant economic recovery is to blame for the fact that not only are companies not investing in internal growth, often, they are taking on more debt to stay afloat.
A recent report by CNNMoney indicates that while small firms may be doing generally better overall than they were just a couple years ago - consumer demand is up - most small businesses are still struggling to dig themselves out of a financial pit.
The example given was of a frame maker, who, during the height of the recession, owed an estimated $30,000 to his glass, wood and paper suppliers. Within the last two years, the owner has paid that down to a balance of $10,000, but the market uncertainty has prevented him from taking out a loan that would allow him to pay off the balance to his suppliers. As the small business owner deftly pointed out, he was loathed to owe the bank any money. Vendors, he said, might at least work with him, while the banks are known for their ruthlessness.
However, some small business owners get to a point when the vendors are too many and the bills too high. This is when a bankruptcy filing may be the best option. And just as a personal bankruptcy doesn't equal financial ruin, a business bankruptcy doesn't have to mean that either. The best way to truly know what it might mean is to discuss your options with an experienced Long Beach business bankruptcy attorney.
For those firms that have thus far weathered the economic storm, they know it's not over yet, and are cautiously wading back into expansion. But the risk of drowning is still very real.
A survey of about 760 small businesses indicated that owner confidence dipped in March - the first decrease that factor has seen in a half a year. Another think tank showed that 43 percent made no effort to borrow funds in 2011. Compare that to 44 percent in 2009, and it shows not much has changed, despite the optimistic outlook of some economists.
However, one area that is seeing a spike in revenue are alternative lending sources - namely cash advances for merchants. These are essentially propped up by online peer groups and crowd funding websites that connect small firms with potential supporters and investors. There is a gaping hole that has been left by the banking industry withholding loans to borrowers who may be less than creditworthy.
But these can be risky investments, and there is a danger for businesses in accepting these loans when they won't have the future funds to pay them back.
As one chief investment officer from San Francisco was quoted as saying, it's as if a doorbell rung in 2008, saying, "Maybe there's such a thing as too much debt."
If you are considering filing for bankruptcy, contact bankruptcy attorneys at Nader, Naraghi & Woodcock to schedule your free consultation. Call (800) 568-0707.
Small firms avoiding loans, citing slow recovery, By Jose Pagliery, CNNMoney
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