Before you borrow any money, you should ask yourself this crucial question:
Will you be putting good money after bad?
As Licensed Insolvency Practitioners, we have dealt with too many directors who didn’t ask themselves this question before getting additional funds. The result for some of them was that things got worse. Their company had been struggling so much that the new funds just delayed them having to close their company due to insolvency. Their business debts had got bigger and, in many cases, they had additional problems due to the personal guarantees which the directors had to take out to secure the new funding.
In many cases, the better option is to use a formal insolvency procedure to deal with the struggling company, and then put the new funds into a new company – one that is free from the historic business debts and onerous contracts.