American Finasco > Blog > Hardship Programs – what you need to know

When a business closes, it usually has a good-sized pile of debts—to landlords, suppliers, utilities, service providers, and possibly a bank or private lenders. If you do close, you still have to make plans to either pay these bills in full, settle them for less than full payment, or an even worse approach – ignoring your debts and hoping your creditors will ignore you—might be tempting, but don’t go that route. It will probably result in your spending the next couple of years hounded by collection agencies, repo people, lawyers, and lawsuits.


Hardship programs

If you are closing or feel like you may be going in that direction, some lenders are offering hardship programs to provide immediate relief to customers dealing with a financial crisis. Lenders may forgive late fees, reduce or waive minimum payments, or freeze interest rates for a short period of time. Typically, three months and on a case by case basis.


Drawbacks to hardship programs

Lenders have been offering these programs because of the financial crisis brought upon us by COVID-19. But, the lender will still protect themselves. This is done by suspending your account preventing any further financial damage.

When your account status changes, this will be reported to the credit bureaus and could hurt your credit score and the ability to get any other credit. Many of our clients have entered these programs and program terms with unrealistic expectations, and when the program comes to an end, and the pandemic still is affecting your business, your debt still remains.

Many lenders are facing high call volumes because of the pandemic, so the wait time may be long. This takes up too much precious time, when you can be focusing on your business. This is where American Finasco can help.

Don’t make the mistake of trying to settle your own debt to save money. Even if you have had success settling one or two small debts for a reasonable amount, it is much harder to settle the larger ones. What can happen if you settle your own debt? The typical outcome our clients have faced are higher payments that are still unaffordable. You can save more money by calling American Finasco first for a free, “no-risk” debt relief consultation to help you decide if our services will work for you.

American Finasco can help restructure your debt. We often work with Private Mortgage Financing Partners to provide a joint solution. PMF Partners can refinance your low loan to value commercial real estate and give you cash out to pay off or pay down other debt. Both options will help decrease your debt-to-income ratio. We provide strategies and take the pressure off business owners who are having a hard time managing their debt. The first step when dealing with creditors is a phone call to American Finasco. We provide our clients effective solutions for business debt relief. Contact us today to get your business on the right track! Visit Contact Us and complete our Online Form for a free consultation or call (800) 299-2909. We look forward to speaking with you.