Business Debt Reduction Strategies For Small Business Owners

Small Business Debt Reduction Strategies Do It Yourself

Many business owners have no other choice but to put some debts around their necks. Money is the life of a business. In fact, there are quite a handful business models that require taking on debt to capitalize on growth opportunities. Thus, If you’re an entrepreneur and you have debt, you’re not alone.

Still talking about debts, In a poll conducted, 36 percent of small business owners said they were uncomfortable with how much debt their businesses carried. Forty-nine percent said they find it extremely difficult to manage their current debt. Truthfully, looming debt can squeeze the joy out of being an entrepreneur.

In this article, let us look at some strategies an entrepreneur can use to reduce his or her small business debt. Achieving this will push the entrepreneur to a positive path, and influence him or her to focus more on moving the business to greater heights.

Here they are:

First things first. If one is faced with a task, one need to first assess how big the task is and what tools one
have at disposal before one can devise a plan to beat it. The same applies when you’re dealing with debt.

Ignoring debt won’t make it go away. And in some cases, what feels like overwhelming debt is just disorganized income, or income you haven’t optimized towards paying off debt. It is always important to have A CLEAR PICTURE of what one is dealing with.

Spend some time to identify your total debt. Create a monthly budget, and determine how much cash you can allocate to paying off your debt. One can recalibrate one’s cash flow and identify ways to put more money toward killing one’s business loans.

There are important measures a business owner should endeavor to summon up in this period. Creating an essentials-only spending plan that sets up some voluntary austerities until one’s debt reaches a goal point, will have a positive effect. Also, by setting specific income goals that are wholly dedicated to paying off debt, one will do well for oneself in the attempt of reducing one’s debts.

These strategies, when approached diligently, can be used for paying down all types of small business debt. But they’ll only be effective if one have one’s company finances dialed in. If your cash flow as an entrepreneur is highly variable, or if you are unable to stick to a budget, you may end up generating more debt by the end of the month.


After doing the first thing first, you now have a clear picture of the debt you owe. Now that you have a clear overview of the debt you owe, it’s time to look for ways to restructure the debt and, if possible, reduce how much you owe.

The attempt to restructure our debt will lead us into subsequent points


Please get this into your head: YOU MUST ALWAYS BE AWARE OF THE TERMS OF YOUR LOANS. Being aware of the terms of your loans will help you to pay them down more effectively. Giving an example for this let me give the exact quote of a finance expert:”For example, if you pay extra on a monthly loan repayment, will that surplus be credited toward future repayments or just deducted from the capital, leaving you on the hook for the full payment next month? This can determine how you apply a temporary cash surplus to killing each of your loans. Loopholes usually only apply to installment loans and payments to vendors. Credit cards and lines of credit
don’t have structures that make this advantageous.”


Be ready to negotiate terms with vendors. Can you extend payment terms on any outstanding invoices?

Renegotiate the terms of your loans. This applies both to the initial loan and your relationship with the loan over time. Sending loans to collections represents a huge loss for lenders, which means there’s a chance your lender will be flexible and accommodating about such things as late fees, restructuring payments, and even renegotiating interest. A hardship letter may also help to support your negotiation efforts with creditors. Paying the debt on time is, and will always be the best policy. Nevertheless, don’t be afraid to approach your lenders and negotiate the terms of your loan. Just be aware that renegotiating the terms of a loan is likely to affect your credit score (so apply this tactic if you’re not planning to apply for another one too soon)


Each time you receive a payment, immediately forward a percentage of the revenue to your lender. If you can, set up an automatic transfer from your bank account so you don’t feel tempted to keep the money in your account. This is one of the most recommended credit card debt reduction strategies.


Debt consolidation is where you take out one large loan (preferably a low-interest loan) to pay off several smaller business loans. Watch out though, many of these require collateral or personal guarantees that might add up to uncomfortable risk.

Having identified and minimized your debt and gotten a repayment plan in place, it’s time to kill the debt you owe using cash you have on hand. See, if you are an entrepreneur and the thoughts of being in debt is bringing you down, am telling you that you don’t need to allow debt dampen your entrepreneurial spirit. The more cash you can generate, the quicker you’ll be able to reduce your small business debt and pay down those ugly loans.

If you want to be increasing your business’ monthly income, you can diversify. Strive adding an additional
product or service to what you currently offers. If you can, you can diversify your approach to untapped niche audiences.

You can also raise your price. As far as you can maintain the same amount of sales, charging more for your products or services is a quick way to increase your income. Nevertheless, before you raise prices, tell your existing customers that prices are going up soon and ask them if they’d like to order anything before the change is in effect. That could also result in a bump in revenue!!!!


Why not liquidate your assets? Look at the things you don’t use (or don’t use to full advantage) and sell them to people who really need them. Just ensure you don’t sell anything you’ve put up for collateral on existing debt. If you do that, you are committing a fraud, and it has serious legal implications. This is one of the most effective personal debt reduction strategies.


What else can you do to make quick financial gain? Can you lease out a portion of your office to another business? Could you save on rent by working remotely? Can you take up a job at your spare time? THINK! THINK! THINK!

Note. There’s nothing wrong if the thoughts of you being in debt makes you feel unease. It will only go wrong if you let it stop you from taking the necessary steps to reduce your small business debt as soon as you can.

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