Good Debt vs. Bad Debt for Small Businesses: What’s the Difference?

Small business debt continues to exceed pre-pandemic levels as business owners fight to keep up with payments and explore relief options.

HOUSTON, TEXAS, UNITED STATES OF AMERICA, June 30, 2023/EINPresswire.com/ -- Leading invoice funding company Charter Capital says small-business owners, saddled with pandemic debts, are struggling to keep up with payments and looking for relief. Additional coverage of the topic can be found in “Good Debt vs. Bad Debt for Small Businesses: What’s the Difference?” which is now live on charcap.com.

The release comes on the heels of a Federal Reserve report, which indicates total debt of nonfinancial businesses grew at an annual rate of more than six percent from 2017 to 2021. The latest Small Business Credit Survey echoes the sentiments, noting that the share of small businesses with debts totaling more than $100,000 presently sits at 40 percent, up from 32 percent in 2018. The report further notes that around two million small businesses indicate making payments toward debt is a major financial challenge.

“The way small-business owners view debt is changing,” explains Gregory Brown, Co-founder and Executive Manager at Charter Capital. “Between existing debts and concerns about the economy, many are doing everything they can to get their debts paid off or avoid taking on debt to begin with.”

While some debts, such as mortgages and those accrued to grow a business or procure an asset can be helpful while building credit, others, such as credit cards and short-term loans, often bury businesses in fees and can be difficult to pay off.

Brown gives a nod to the Small Business Credit Survey, which indicates more than 681,000 small businesses applied for funding in the past year with the hopes of refinancing or paying down their debt. He says that Charter Capital is seeing a similar trend in relation to applications for invoice factoring, a funding solution that provides businesses with upfront cash for their unpaid B2B receivables. Because the client responsible for the invoice is the one paying the balance, the business itself doesn’t accrue debt.

“Because it’s debt-free funding, it’s a favorite for those trying to avoid taking on debt as well as those trying to get out from under their existing debts,” Brown says. “Plus, most businesses qualify, and it works across a variety of industries, so we’ve been able to help a lot of small businesses strengthen their financial standing.”

Those interested in learning more about invoice factoring or who would like to request a complimentary quote may do so by calling 1-877-960-1818 or visiting charcap.com.

About Charter Capital

Headquartered in Houston, Texas, Charter Capital has been a leading provider of business funding solutions for the B2B sector for more than 20 years. Competitive rates, a fast approval process, and same-day funding help businesses across various industries secure the working capital necessary to manage daily needs and grow. To learn more, visit charcap.com or call 1-877-960-1818.

Keith Mabe
Charter Capital - Factoring Made Simple
+1 713-960-1818
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