HIGHLAND PARK , IL , September 27, 2006 -- In a sign that the slowing U.S. economy may be catching up with small businesses, a leading debt-management firm says that this year it achieved its first $1-million in debt savings for its small-business clients earlier than in any other year in its 43-year history.
Performance Source Inc, based in suburban Chicago , reported that the milestone was reached this year in the second week of May, instead of July as usual. The fact that PSI has not advertised or added staff this year further suggests that small companies increasingly are struggling with their debts.
For over a year now, rising interest rates and fuel prices have hit these companies� cash flow and profitability especially hard, causing some to fall behind in paying their loans, leases, suppliers, and other creditors, as well as amounts owed in judgments and lawsuits. All of these debts are the focus of PSI�s negotiating efforts for clients.
Another reason PSI reached $1-million in savings earlier this year is because larger firms are now choosing to use its services. �Bigger companies tend to have more debt,� notes PSI President Jim Herst, �and these companies are discovering professional, third-party debt negotiators, such as ourselves, as a solution to their problems.� Instead of consolidating a client�s debts, PSI deals with each creditor individually, negotiating settlements which typically reduce the client�s total debt load by up to 80%. PSI works on a client-approved contingency basis as its sole source of revenue.
It�s no surprise that small businesses increasingly are turning to debt management. The new Bankruptcy Abuse Prevention and Consumer Protection Act, which went into effect in October 2005, places strict new limits on disposal of debts, both business and personal. �The downside of this law is that it makes it harder for people to get out from under business debts,� says Lloyd Chapman, president of the American Small Business League.
Small businesses are vital to the U.S. economy. According to the U.S. Small Business Administration (�Small Business by the Numbers,� June 2004), small firms represent more than 99% of all employers and 50% of the private-sector workforce. They provide about 75% of the net new jobs added to the economy each year, and more than half of the non-farm private gross domestic product, or a GDP of roughly $6-trillion.
About Performance Source Inc.
Since 1963, Performance Source Inc. (PSI) has helped small businesses nationwide improve their cash flow, and in many cases avoid bankruptcy, by negotiating with their creditors to reduce their business debts by as much as 80%. PSI has helped thousands of clients save tens of millions of dollars and satisfy their creditors without borrowing additional money. Under the company�s risk-free process, clients decide which payables they want PSI to negotiate, they approve (or decline) all proposed settlements in advance, and owe PSI nothing if a settlement is not reached or not accepted. And because the company also handles all contact with clients� creditors, clients are able to focus on growing their businesses. For more information about PSI, please call 800/883-5080 or visit www.performancesourceinc.com. Performance Source Inc. is not affiliated with Performance Source II, Ltd.