What Struggling Ohio Business Owners Can Do
The economy today is weighing everyone down. Whether small or major corporations, everyone is feeling the impact of global unrest, tariff wars, and struggling economies. This particularly haunts small-to-medium businesses in Ohio, as they struggle in many ways.
Some Ohio businesses have recurring debts, while others can hardly make a profit to stay afloat. If that sounds like your story, then you have multiple options. Let us explore them together.
Did you know? In 2022, there were an estimated 996,000 small businesses in Ohio, making up for 99.6% of all corporations in the state. [1]
Top Government Support Systems in Ohio for Businesses
Local and federal governments have various plans that Ohio business owners can benefit from. These programs focus on financial advice, assistance, and helping businesses get government grants or find work. Depending on the business type and scale, these programs can be handy.
The following are the four main business support systems available in Ohio:
Ohio Small Business Development Centers (SBDC)
Ohio Small Business Development Centers are ideal for small-scale businesses that are at risk of downturn or cash shortfalls. Businesses that are aiming to pivot, grow, or restructure can also benefit from SBDC. They are also ideal for startups that are looking to stabilize early-stage finances.
Here are the key aspects in which SBDC provides support:
- Access to capital and funding assistance
- Business planning and financial modeling
- Free one-on-one counseling with certified business advisors
- Market research and sales strategies
- Sector-specific and regional support
- Training and specialized programs
Ohio Minority Business Assistance Centers (MBAC)
The MBAC is a government program that is ideal for those who qualify as a minority. This applies to people of color, women, and disadvantaged-owned businesses. The program aims to provide technical support and guidance to businesses of all kinds.
Here is what MBAC can assist you with:
- Access to capital and loan packaging
- Contract procurement and bidding support
- Free one-on-one counseling and technical assistance
- Marketing and resource connections
- Tiered services for startups and growth
Ohio APEX Accelerators (Formerly PTAC)
Small and mid-sized businesses can benefit from the APEX Accelerators’ assistance.
This program aims to equip businesses with government contracting and help them overcome revenue shortfalls. It aims to help manufacturing, service, or construction services businesses through market shifts.
Here is how it can assist you:
- Bid preparation and compliance support
- Free one-on-one counseling and training
- Marketing to government buyers
- Post-award assistance
- Seminars and specialized workshops
U.S. Small Business Administration (SBA)
The Small Business Administration aims to assist businesses facing cash shortages or economic difficulties with federal grants.
SBA Loan programs provide disaster-impacted businesses with funding opportunities via small business grants, business loans, and low interest rates. Specific programs also assist minority-, women-, or veteran-owned businesses.
Here are the specifics of this program:
- Contracting programs like 8(a) and HUBZone
- Disaster assistance loans and grants
- Free counseling via SBDCs and SCORE
- Plans like 8(a) programs, 7(a), 504, and microloans*
- Specialized support for veterans and exporters
*Besides the 8(a) programs for business development, SBA also offers Economic Injury Disaster Loans.
Is Bankruptcy a Viable Option in Ohio?
A bankruptcy can be a viable option for Ohio businesses that have no other way out. Businesses heavily indebted by high interest rates or amounts overdue can benefit from these bankruptcy types, either by liquidation or repayment plans.
Analyzing the pros and cons of bankruptcy should help you determine whether filing for any chapter is ideal for you. This is where a consultation with a bankruptcy or debt relief attorney can help you weigh your options.
Which Bankruptcy Type is Ideal for Struggling Businesses in Ohio?
The type of bankruptcy chapter ideal for you depends on a few key factors. All bankruptcy types put an automatic stay on debt collection.
If you are looking for resources for starting back again, then the repayment plan would be ideal for you. If you are looking for a fresh start and need to get rid of your debts, then liquidation might be right for you.
Here are the three main bankruptcy chapters you can file in the state of Ohio:
Chapter 7
If your business has become non-viable and you need a fresh start, then Chapter 7 may be the right option for you. This liquidation process sells assets to pay creditors and provides a clean start while protecting you from further liability.
Chapter 11
Chapter 11 reorganizations allow small-to-medium businesses a debt restructuring opportunity, granted they have debt under $7.5 million. By negotiating with creditors, the reorganization subchapter may allow you to continue operations at lower costs than traditional Chapter 11.
Chapter 13
Chapter 13 bankruptcy is ideal for sole proprietors or small businesses. Instead of a repayment plan of 5-7 years, like in Chapter 11, this proposes a 3–5-year reorganization plan. Under this chapter, you can continue the business while repaying debt.
Things To Avoid As a Struggling Business Owner Before Filing Bankruptcy
While there are certain things you can do to protect your business, there are specific actions you must avoid.
Filing for bankruptcy can tempt you into making wrong decisions before filing or during the process. These actions can jeopardize bankruptcy procedures and make your situation worse.
Here is what you should avoid doing:
- Borrowing from Credit Unions or Retirement Plans: Borrowing money from credit unions or your retirement plan is a bad idea before filing for bankruptcy. This is particularly a bad idea if you are borrowing to pay off debt, as bankruptcy would eliminate specific types of debt anyway.
- Taking Out Loans: Borrowing from other people, businesses, or employers is a terrible idea prior to a bankruptcy. This can be viewed as fraud, as a creditor might think you took out a loan to eliminate their debt during bankruptcy filing.
- Transferring Balance before Bankruptcy: Do not transfer balance or take any new loans before filing for bankruptcy. This can halt the bankruptcy process, as the court may order you to repay loans or clear up any transfers made before bankruptcy filing.
- Transferring Assets to Someone Else: Transferring your secured assets to someone else before filing for bankruptcy can be a mistake. Specific types of assets, such as business tools, vehicles, property, etc., may be exempt in specific cases. By transferring these assets, you may jeopardize saving them in a bankruptcy filing.
Are You Struggling as an Ohio Business Owner?
If you are struggling as a business owner, you can opt for bankruptcy if your debt is significant and you need a viable way out.
A consultation with Richard West Law Offices can clear things up for you. You will be guided and helped through the options you have. Call 937-748-1749 and book a free Ohio bankruptcy consultation with Richard West Law Offices today.
Frequently Asked Questions (FAQs)
You should choose Chapter 7 if you need to liquidate your non-viable business. This will sell your assets to pay creditors. You should opt for Chapter 11 if you wish to reorganize and keep your business operating while repaying debts over time.
Sole proprietors are usually fully liable for business and personal debts. If you are right on repayment schedules and loan terms, then you do not have to worry about liability or impact on credit scores.
You should explore debt negotiations or find ways of increasing income via side work. Selling non-essential assets or using government (federal or state agency) programs can also be viable. A debt relief lawyer can assist you with alternatives to bankruptcy.
Chapter 7 usually takes around 3-6 months from filing to discharge, including credit counselling and creditor meetings. Chapter 11 can vary, but usually takes around 6-12 months for repayment/reorganization programs to take effect.
This is a funding category by FedEx Founder’s fund, that provides small business loan to military spouse or veteran-owned small businesses. It offers eligible applicant types by lending transactions of around $10,000 to $25,000 for business recovery.
Source:
[1] U.S. SMALL BUSINESS ADMINISTRATION. (2022). 2022 small business profile [Report]. https://advocacy.sba.gov/wp-content/uploads/2022/08/Small-Business-Economic-Profile-OH.pdf
