General knowledge
Debt Restructuring: Your Lifeline During a Crisis
3 MIN READ
Debt restructuring is a strategic lifeline that can help businesses navigate challenging financial times. It’s important to understand that financial difficulties aren’t always a result of mismanagement; external factors such as economic downturns or unforeseen circumstances can also contribute.
Here are several debt restructuring strategies that can be implemented:
- Extend Repayment Terms: By extending the repayment period (e.g., from 3 to 4 years), monthly installments can be reduced. While the creditor may slightly increase the interest rate, this strategy provides businesses with more cash flow during economic downturns.
- Defer Principal Payments: This involves negotiating with creditors to pay only the interest portion for a specific period (e.g., 6-12 months). Once the deferment period ends, the principal balance becomes due. This strategy helps businesses manage short-term cash flow challenges and avoids accruing default interest.
- Reduce Interest Rates: Negotiating a lower interest rate can significantly reduce monthly payments and improve a business’s financial health. It’s essential to research interest rates offered by different financial institutions before negotiating.
- Waive or Negotiate Late Fees: Under Thailand’s central bank regulations, financial institutions are required to charge late fees based on the actual overdue period. Businesses can negotiate with their creditors to waive or reduce these fees.
- Request Additional Working Capital: The Bank of Thailand encourages financial institutions to provide additional working capital to viable businesses. This can help businesses maintain operations and recover from financial difficulties.
- Consolidate Debts: Combining multiple debts into a single loan can simplify repayment and potentially secure a lower interest rate. This is particularly beneficial for businesses with high-interest debts, such as credit card balances.
- Increase Payments or Frequency: Businesses with stable cash flow can accelerate debt repayment by increasing monthly payments or making more frequent payments. This can reduce overall interest costs.
- Refinance: Refinancing involves obtaining a new loan to pay off existing debts. This strategy can be advantageous if businesses can secure a lower interest rate on the new loan.
At FynnCorp, we offer comprehensive debt restructuring services. We work closely with businesses to negotiate with creditors, explore options like debt consolidation, interest rate reduction, and payment deferrals. Our goal is to tailor a debt restructuring plan that minimizes financial losses for both businesses and creditors.
Discover the opportunities for your business with FynnCorp.
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