Business debt restructuring starts with giving the business owner and lender a shared, accurate picture: where revenue comes from, what the expenses are, and which cash flows could repay debt. This guide covers records to prepare and questions to ask before negotiating, using the Bank of Thailand’s SME assessment framework.
Start by Summarizing the Business and Its Debt
Collect records from the accounts, statements, and contracts rather than relying on remembered figures. The Bank of Thailand’s SME financial-strengthening framework considers revenue and expenses, repayment capacity, outstanding debt, operating performance, collateral, and recent revenue or profit trends.
| Information to Prepare | Example Records | Questions to Ask |
|---|---|---|
| Revenue and trade receivables | Monthly sales, overdue customer payments, seasonal sales | When will cash actually arrive, and what remains uncertain? |
| Operating costs | Materials, payroll, rent, utilities | Which costs are essential to keep the business operating? |
| All debts | Lenders, outstanding balances, payments, interest, due dates | Which months have the heaviest obligations, and which accounts are becoming difficult to pay? |
| Collateral and guarantors | Property tied to contracts, guarantors, and other obligations | What obligations must be understood before proposing new terms? |
Where possible, separate business accounts and transactions from personal expenses. Keep supporting records such as invoices, receipts, bank statements, and financial statements. A Bank of Thailand case study describes a business organizing income and expense records and keeping bank-transaction evidence to show actual income and assess an affordable borrowing amount.
Assess the Cause and Whether the Business Can Continue
Describe clearly why repayment has become difficult—for example, lower revenue, higher costs, delayed customer payments, or a one-off expense. Separate temporary problems from issues affecting the long-term business model. Then prepare reasonable revenue and expense forecasts under several scenarios, stating assumptions such as continued lower sales or slower customer payments.
The Bank of Thailand’s guidance says debt restructuring should consider the cause of the problem, risks, operating and financial information, and forecasts based on plausible assumptions. New terms should fit the type of business and its repayment capacity. Do not base a plan on sales that have not been supported by evidence.
Talk to the Lender When a Problem First Appears
When you see signs that cash may not cover payments, contact the lender before communication breaks down. Explain what has changed, prepare figures and documents, and ask what options may be considered under the business’s contract. The Bank of Thailand advises borrowers who are starting to face difficulties to contact their financial institution promptly to discuss possible solutions.
Any change depends on the lender, contract, business position, and information reviewed. Approval or particular terms are not guaranteed. Ask for details in writing and consider reviewing the impact with an accountant or legal adviser before deciding, especially where collateral, a guarantor, or a legal notice is involved.
Review the Terms Before Signing and Monitor the Plan
- Check the principal, interest, payments, term, fees, and due dates.
- Read all terms about collateral, guarantors, and default.
- Prepare a new cash-flow forecast using cautious assumptions.
- If the figures still show that payments are unaffordable, return to negotiations and seek advice before signing.
- After reaching an agreement, monitor cash received and paid, and tell the lender about events that could affect the plan.
The key is that the new proposal must be workable for the business throughout the contract period, rather than simply making the first monthly payment look smaller.
Sources and Further Reading
- Bank of Thailand: Strengthening micro and small businesses in the Northeast — an example of organizing accounts, income evidence, and conversations with support agencies.
- Bank of Thailand: Principles for restructuring business debt — published in 2020; use it for general principles, not as a current list of programs or terms.
- A guide to reviewing debt and repayment capacity for individuals: Assessing debt and repayment capacity
- Debt and credit video and article topic: Browse the topic
This is general information, not legal, accounting, or business-specific financial advice. Decisions should be based on the actual contract and advice from professionals familiar with the business.