Ways to Manage and Pay Off Small Business Debt

It’s common for people starting a business to incur debt, sometimes a substantial amount. Still, such debt can be enormously stressful and even hinder business goals. At length, it can even turn into an expense for which you need business debt relief

Here are ways to manage and pay off small business debt that can help you stay on the right financial track.

The Issue

Small business owners, particularly those just starting out, have a myriad of pressing things with which to to deal — often simultaneously. Adding debt to a list that can include employees, vendors, and new marketing campaigns can be quite burdensome. But there are steps you can take to keep your debt under control.

Get Organized

Finding out how much debt you have is your first task. Whether you use an app, trusty spreadsheet, or write your balances down, you must gain a clear-eyed view of your financial situation.

Each debt entry should include information such as the name of the creditor, the monthly payment amount, the total remaining balance, the interest rate, and the debt type (credit card, personal loan, etc.). It should also list the due dates, debt purposes, and payment methods. 

Compiling your debts will allow you to more easily figure out whether all your expenses are necessary, which debts are recurring, whether you’re likely to take on more debt, and how best to solve what caused your debts. It’s key to get at the bottom of what got you into this situation.

Pare Spending and Bring in More Income

While business debt requires special considerations, there are aspects that can be treated like simple personal debt.  Everything fundamentally boils down to spending and income. For example, reducing your spending will give you more money to put toward your balances. Bringing in more income will also provide more debt funds. The following are ways to do both:  

  • Get rid of the extras. Additional office space, employee retreats, and lavish luncheons and the like can help with employee recruitment and retention. However, your overarching priority is to make sure your company is financially sound. Think about slashing nonessential expenses, with the thought that you can reintroduce such luxuries when you’re back in the black with a plan.
  • Modify your prices. More earnings might be possible by either raising your prices or dropping them to enhance sales volumes. However, this is reliant upon your clientele and business model.
  • Pay less to vendors. You don’t want to compromise solid business relationships but consider where you can shop around for better rates. 
  • Improve billing. Sending invoices more frequently will mitigate workflow problems that can sometimes result in debt. Thirty-day invoices are becoming passe; payment windows of 14 days are becoming more common. 
  • Make more cash. Look for other products or services you can create or provide that would be of interest to your customer base. Perhaps you have the capacity to increase business hours at a physical location or add another site.  

Reach Out to Creditors

Let your creditors know what’s going on if you’re already in a bind, or are about to be. They will usually be amenable to working with you if you contact them early on. You may be able to get your interest rate decreased or a more favorable payment schedule.

In Summary

Using these tips for managing and paying off small business debt, you can focus on your core business. There’s always business debt consolidation or business debt relief if, despite your best efforts, your debts become untenable. 


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