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Need Help From Your Creditors? Ask for It

Dr. Cindy McGovern
Dr. Cindy McGovern

If you need some help paying off your creditors, don't be afraid to ask them for assistance.

  • It's possible for small businesses to negotiate new terms on monthly payments and past-due amounts, but not without coming right out and asking for them.
  • Planning what you will ask for and how you will ask for it are key to getting what you need.
  • Renegotiating terms involves the same sales skills you use to promote your business and sell your products and services.

Fewer-than-usual sales and lower-than-optimum profits do not, unfortunately, come with an automatic break on your monthly rent or loan payments. But many vendors are offering flexibility in the form of deferred payments or maintenance payments.

Still, in most cases, you have to ask for those breaks.             

It may be an anxiety-provoking thought. So think about the interaction as a sale, and go about it the same way you would if you were selling your company's products or services.

This prolonged era of stilted sales, halted incomes, and lost jobs is the perfect time to learn a key principle of successful selling: You need to come right out and ask for what you want.

What's true during business-as-usual is just as true when business is tanking: Almost universally, you won’t get what you need unless you ask for it.

Of course, not every supplier, lender, or landlord will lower your payments or defer them, even if you ask. But if you don't ask, the answer is automatically no. If you do ask, you've at least got a shot.

And many of those who hold the purse strings are being extra accommodating during this pandemic. They understand that small business owners have to pay the mortgage on their homes, feed their families and possibly even keep their employees afloat, even though they're not allowed to operate at full tilt.

To successfully negotiate flexible terms with your creditors and vendors, start by making a plan for how you will approach them.

Start by making a list of each of your banks, suppliers, insurance companies, landlords and lenders. Find the name and contact information for each local decision-maker, as a request to a person who does not have the authority to grant it will waste your time. Make an appointment to visit or telephone that person. Ask what's possible.

Having a plan will make it more likely you will get this unpleasant task done, and less likely that you will forget to contact any of your vendors or creditors.

Then comes the hardest part of the process: asking for an accommodation. Here are 10 tips for asking the right way and increasing your chances of hearing a "yes."

1. Know exactly what you want and need

This is part of your planning process. Collect the details about all of your balances, monthly payment requirements and past-due amounts. Have your account numbers handy. Determine how much, if anything, you can afford to pay, starting now.

The more prepared you are to answer questions, supply details and present your case, the better your chances for getting the relief you need.

The better prepared you are and the more confident you are of your own details, capabilities, and assurances, the better a creditor will feel about making a deal with you. Inspire trust by showing you are serious, well-prepared and committed.

In addition to planning your approach, plan your response in case the creditor says "no" or offers an alternative arrangement that falls short of giving you everything you need. Negotiation is a two-way street; that is, if the lender makes a counteroffer, you can add new information or make a slightly different request yourself.

Anticipate every possible scenario and have a plan to respond to each one.

2. Look for opportunities to make your request

Instead of cold calling your creditors and suppliers with your request, first, send an email to each one asking for an appointment to chat. It might help to schedule a video call so you can look each other in the eye.

Observe whether one time might be better than another for your "ask." If your local bank branch has just announced that it will be closing, for example, find a way to speak to someone at the corporate level instead. If a vendor has called to beg you for business because it is sinking, you might want to put off your request for another day.

3. Prepare your pitch

Know what you're going to say before you pick up the phone. Don't write a word-for-word script – that can make you sound insincere. But do make a list of details you want to share so you don't forget any of them.

4. Start with small talk

Even though your request is all business, the person on the other end of the phone might appreciate you for asking how she's doing. Acknowledge any problem she might share with you, but don't press for personal details. It's just an icebreaker to let the other person know you understand you are dealing with an actual human being.

5. Make your request in the form of a question

"Would it be possible for you to defer my monthly payment until my business can reopen?" will get you a more positive response than "I need you to do it" or "You have to do it."

When you ask for a favor or an accommodation, you're making a request. Be sure you're asking so you don't appear to be making a demand.

5. Ask for precisely what you want

Don't be vague. Don't beat around the bush. Ask the individual, "Would you be willing to lower my monthly payment to $125?" That's better than the less-specific, "I'm having a hard time keeping up with my payments. Can you help me?"

6. Ask for more than you think is possible

Ask your creditors if they will waive some of the payments altogether. Ask if they will forgive your late fees. Ask if they can permanently lower your monthly minimum. Ask if they can lend you more money to tide you over.

Even if you hear a "yes" in response to your request, ask for more. Ask, "What else can you do for me?" or "Can you go any lower?"

7. Offer something in return

What you're doing, in essence, is "selling" your creditors on helping you out of a bind. Why should they? What will they get out of it?

The best and easiest sales are the ones that create a win-win for both you and the creditor.

Sometimes, the other party is happy to help you because you have been a reliable and long-time customer. Sometimes, it's because the two of you have developed a friendly relationship over the years. Sometimes it's because you are willing to do your part.

You can offer to pay for something rather than nothing. You can offer to pay this creditor back first once you get back on your financial feet. You can show good faith by explaining that you have sold your boat or rented out your vacation home.

Point out your good intentions, your stellar repayment record to date and your loyalty to the creditor. It could work in your favor.

8. Share your story

Often, authorities – who are human, even if you only hear their voice over the phone – will help you because they understand why you need help and they empathize with you. Saying you're having a hard time keeping up with your payments might not be as compelling to the creditor as explaining that you used your family home to guarantee your business and that you have no other place where your children can live.

Don't embellish or dramatize your situation, but don't keep your struggles to yourself either. Your creditor wants to know why you need special consideration. This is no time to let your pride get in the way of your company's survival.

9. Be honest

A straightforward explanation of your circumstances, your financial situation, and your expectations are more effective than vague answers whose details, if you're not being entirely honest, are likely to change during the conversation. Don't say you already contacted the local business development organization to ask for help if you haven't. Don't insist that you have never missed a payment if you have.

Likewise, be realistic about how much you can pay if the creditor agrees to work out new terms with you. If you can reasonably pay nothing until your business reopens, don't commit to $200 a month. Overcommitting when your income is in flux is not a smart business move, and it could result in a broken relationship with your creditor. It could also land you in greater financial trouble that you already are.

10. Be grateful

If your vendor says "yes" to your request, take two important actions: One, thank the creditor, both at the moment and in writing afterward; two, keep your end of the deal. If you agreed to pay $200 a month, pay it. If you promised to apply for a Small Business Administration loan, apply for it.

Even if the answer is no or only partially yes, keep your cool. You might need to come back to this creditor again in the future, either to try another renegotiation or to borrow more money when the economy improves and you want to expand your business. Keep the meeting friendly and the relationship solid.

Many of the vendors you're negotiating with are struggling financially, too. Some of the companies you owe money to are small and medium-size businesses like yours. If you find one who is sympathetic to your situation and who is willing to work with you to lighten your load, show your gratitude, even if you didn't get exactly what you wanted.

Negotiating your way into a more manageable financial situation might be the most important sale you make during the pandemic.

Image Credit: Tommaso79 / Getty Images
Dr. Cindy McGovern
Dr. Cindy McGovern Member
Known far and wide as “Dr. Cindy,” the First Lady of Sales, Dr. Cindy McGovern holds a Doctorate Degree in Organizational Communication and a Master’s Degree in Marketing. She earned her reputation by building (and rebuilding) entire sales programs from the bottom up. Dr. Cindy, who is CEO of Orange Leaf Consulting, has helped hundreds of companies and individuals around the world from small to huge create dramatic and sustainable revenue growth. She has also authored, Every Job is a Sales Job: How to Use the Art of Selling to Win at Work, scheduled for release in September 2019 by McGraw Hill Professional. Dr. Cindy is an expert in the areas of sales, interpersonal communication, leadership, and change management. She can quickly figure out what an organization or individual needs to be more successful, and her current knowledge of many industries helps leaders implement new behaviors needed to succeed. One reason for her success is that she serves as both teacher and coach, working together with individuals, regardless of their role or where they are in their career to co-create their future. She doesn’t tell her clients what to do—she listens, learns about their successes and challenges, and then helps them create strategies designed to be effective long after her visit has ended. An in-demand speaker, Dr. Cindy has presented at both national and international conferences on the topics of Sales, Management, Leadership, Sales Management, and Interpersonal Communication, Organizational Change, Conflict Resolution, and Collective Bargaining.