Tips on How to Reduce Small Business Debt
Most small businesses carry a certain amount of business debt. They have taken small business loans at some point or the other to start up or to expand and improve the business. Small business loans can become a burden and many small businesses are struggling to meet their payments on time. Defaulting on loans puts them deeper into debt.
Interest rates are high and are cutting into profits and making it difficult for small businesses to expand and improve. Our experts at ZocLaw.com provide some tips on how to reduce small business debt.
Watch Your Spending Habits
Small businesses have the tendency of not keeping their spending in check. You need to have detailed knowledge of all your business expenses and cut back on items and services that are not a necessity. Keep a cap on travel expenses and set limits. Use rewards to pay for trips and flights. Put a hold on outsourced services that are not adding value to your business.
Review Your Budget
You have kept your spending in check and you can now review your budget and determine how much more you can pay towards your business debt. Do a spreadsheet of your remaining expenses and your estimated income. Review your pricing and ensure that your profit margin is adequate. Set a minimum amount for debt payments and add this as an expense every month. Stick to your plan and do not use the funds for anything else.
Prioritize payments to the higher interest credit cards first. Follow with the lower interest rate credit cards. It is wiser to pay off one at a time. Although you are prioritizing payment of one credit card, make sure that you a making minimum payment to the others.
Consolidate Your Debt
Consolidate all your unsecured debt to a single loan with a lower interest rate. You will be making a single monthly payment and need not worry about making payment to several different creditors. You can move your debt to a business credit card with a 0% introductory APR (Annual Percentage Rate) if you are confident that you can pay it off before the 0% percent introductory period is over.
Approach your creditors and try to renegotiate your loan interest rate. You may be able to increase the payment period which means that you will be making lower payments for a longer period. Creditors will usually listen to you and grant certain concessions.
Being complacent and slowing down your business operations is not advisable. Always keep your business moving forward. If opportunity presents itself to expand or improve your business take it with both hands. Keep sight of your goals.
Commit to Changes
You cannot reduce your debt by continuing what you are doing. Commit to the changes and strategies that you have decided upon and implement.
If all else fails and you are still unsure on how to reduce small business debt, our experienced business debt relief lawyers can help. Schedule your free initial consultation to find out more about: