Since the start of the pandemic, many small businesses in South Carolina and throughout the United States have experienced financial hardship and logistical challenges. During a period when many companies were unable to do business in person, some were able to pivot and shift many aspects of their operations online. However, most businesses experienced lower profits, fewer sales and other issues that impacted the overall financial health of the company.
As a result of pandemic-related impacts, your company may be in a position where your debt has quickly outpaced your company's ability to keep up with payments. An accumulation of unpaid balances and liabilities can be detrimental to the long-term health of a business, but bankruptcy could be a reasonable option for a struggling business. Certain bankruptcy options provide the opportunity for a better financial future for your company.
The economy's impact on businesses
Experts maintain that the health and strength of the economy has a direct impact on the number of businesses that file for bankruptcy. When there is a downturn in the economy, it affects its bottom line as it reduces profitability and liquidity. In turn, a business will be less likely to have the ability to make regular payments and keep up with debt. Due to the pandemic, businesses in a range of industries have experienced difficulty that led to unmanageable amounts of debt.
Statistics show an increase in the number of Chapter 11 bankruptcy filings in 2020, which was the beginning of the pandemic-related economic downturn. Some experts believed the number should have been higher, but government aid packages and other efforts assisted small businesses and consumers during this time. Filing for Chapter 11 bankruptcy is a reasonable option for struggling businesses that want to remain operational and seek more stability for their company long-term.
Struggling with debt
The impact of the pandemic was significant for many businesses, and even highly successful companies encountered challenges during this period. When facing an overwhelming amount of debt, it may be helpful for a business to consider seeking bankruptcy protection as a way to confront their balances, secure protection from debt collectors and remain operational. An assessment of the individual situation can help you understand how to make the best possible choices for the long-term interests of your company.