There’s a lot to manage as a small business owner: future business goals, vendors, new marketing strategies and debt. Debt is sometimes necessary to get your business off the ground or keep it running, but it can add up quickly and become unsustainable if you don’t keep track of it.
In many cases, there are a few different ways you can get help with your business debt. These include debt consolidation, refinancing and even debt settlement. Each has its own pros and cons, so it’s important to understand your options and weigh each before making a decision.
Managing debt
A common strategy for managing debt is to reduce expenses. This can be done by cutting back on unnecessary spending or finding ways to increase revenue. For example, you may need to eliminate an expensive office space or stop putting money toward slow-moving inventory in order to free up cash to pay down your debt.
You can also try negotiating with creditors to restructure your debt terms. This could mean lower interest rates, shorter payment terms or even deferring payments temporarily. Creditors don’t want your business to fail, so they’re often willing to work with you if you ask.
If your business is in serious trouble, you can look into debt restructuring or even bankruptcy. While these options can have a negative impact on your business and personal credit, they can help you get back on track by eliminating or reducing your debt. However, before taking this step, you should consult with an expert in debt resolution to ensure that you can successfully handle the process and limit your liability to creditors.
Getting out of debt
There are a few ways to reduce your help with business debt, including paying off your loans faster and negotiating better terms. You can also prioritize your debts to determine which ones you should pay off first. This can be based on your credit score, amount of time in business or annual revenue.
One of the most common strategies for getting out of debt is to get a debt consolidation loan. This involves borrowing more money than you owe to pay off all of your existing business debts. This can be beneficial because it typically has a longer repayment term, lower interest rate and lower minimum monthly payment. It’s important to remember that not all lenders will be willing to offer you a debt consolidation loan, so you should shop around. You may also be able to find financing through a government-backed program, such as the Small Business Administration, which has more flexible qualifying standards and offers lower minimum interest rates than traditional business loans. You can also work with a debt management company, which will handle all of your business debts in exchange for a fee. This can be an excellent option if you have multiple debts with different banks or creditors and don’t have the time or resources to deal with them yourself.