Help! I’m drowning in debt!

“I’m sorry. Hang on a second. Are you telling me that you agreed to take $100,000 only to have to repay $140,000 in 9 months!? That’s insane. That interest rate is like north of 50%.” The smartly dressed businesswoman held her head in one of her hands while holding her chic reading glasses in the other. Her hand holding the glasses slightly trembled with the weight of the words that just left her mouth.

As I sat in the conference room last week I had the opportunity to witness a complete meltdown between two business partners. As typically set up, one partner is responsible for the “back of house,” that is the billing and collection of revenue, the accounting of monies owed to vendors, processing payroll, and generally making sure the business has enough cash to operate. The other partner is responsible for the “front of house.” This is typically the sales side, the rain makers and deal makers, the face of the business to potential employees, clients, vendors, and maybe even investors. It generally takes both parties to effectively build and run a business. However, this meeting was headed off the rails real quick; one partner hadn’t fully disclosed the details of a new debt instrument they decided to take out on the business’s behalf.

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