Debt Restructuring vs. New Financing: Ask Which Problem You Are Solving
Compare restructuring with taking on new debt when current payments are already straining the business.
New cash can hide an unchanged problem
A new advance may temporarily cover a shortfall while increasing the total obligation and adding another payment. The first question is whether the business has a timing gap or a payment structure it can no longer support.
Compare net cash with the new obligation
If refinancing or renewal is considered, record the gross amount, old payoff, every fee, actual net proceeds, new payment, and total obligation.
Restructuring begins with payment capacity
A restructuring strategy uses the operating budget to define realistic objectives. It does not assume that a creditor will accept a proposal or that a lower periodic payment automatically improves the total outcome.
Choose the path that improves the complete picture
A useful next step should improve operating cash flow without depending on repeated borrowing. Review all obligations together before committing to either path.