Frequent, honest communications with the lender are crucial when a small business begins to have difficulty making its 7(a) loan payments, experts said.

Too often, business owners ignore loan delinquency notices hoping for increased sales or lower expenses. This delay, often lasting several months, will worsen the cash flow crisis and could lead to the company’s bankruptcy, experts said.

The borrower “should notify their lender immediately,” said Ree Wackett, senior business advisor and small business trainer at Stony Brook University’s Small Business Development Center. “They can create a new repayment plan; they will completely restructure the loan because they want their money back.”

She and others said struggling entrepreneurs should look at all aspects of their business to find savings and growth opportunities. For example, entrepreneurs may downsize, sublet space to another business, or reexamine their expenses.

“The market may be changing and they may need to offer additional products or services,” Wackett said.

If the business fails, filing for bankruptcy in federal court buys time to reorganize, sell or dissolve, according to Mikal J. Krueger, a bankruptcy and real estate attorney at the McConville law firm Considine Cooman & Morin PC in Rochester.

By filing for Chapter 11 bankruptcy protection from creditors, he said, the company receives “an automatic stay that stops the lawsuits, foreclosures and the collection process.” It is designed to best preserve the operational capacity of the company.”

The business owner can also file for Chapter 11 “to protect their personal assets,” Krueger added.

Other options include Chapter 7 liquidation and an out-of-court settlement with the lender on how to repay the loan.

“The best way to save your business is to move as soon as possible,” Krueger said. “Every day, every week, every month that you let go by and you don’t solve the problem, that’s time you’ve wasted forever trying to find a solution.”