6 Handy Tips for Dealing with Small Business Debts

Debt is one of the major reasons why a large number of small and medium businesses fail miserably. Therefore, dealing smartly with debt is no less crucial than getting access to capital and having good credit arrangements. Even if a small business manages to borrow credit, it often becomes difficult for them to repay the debts. So, if the debts are getting out of hand you need to work out a plan and make concerted efforts to get rid of the debts.

Here are 6 useful tips on how to smartly deal with small business debts. Hopefully, these suggestions come in handy.

  1. Using personal funds: If your small business has got stuck in the debt trap, you can use your own money to fix the problem. It becomes especially mandatory for you when your small business is the source of your livelihood. Every penny invested to shore up your business will pay dividends in the end.
  2. Cutting costs: If it is not possible for you to bail out your small business with your personal funds, then you can reduce business costs. You can do it in a number of ways. If there is some unused space in your office, you can let it out. You can consider relocating your office to a location where the rent is cheaper. Buying low-cost food items and other such things can also be a useful measure. It is not always good for your business to downsize the workforce, yet you can do it to save your business.
  3. Reinventing your marketing: In the meantime, restructure the way you market your products or services, and ramp up your business. It will help you generate revenue. Be in contact with your clients and provide them with a markdown if they are ready for early or advanced payment. Similarly, contact your suppliers and convince them for deferred payments and discounts.
  4. Communicating with creditors: When in debt, communication with creditors count. Try to be as open and communicative with your creditors as possible. This will open up the avenue of working out easier credit repayment options. Your lenders can even reduce the interest rates or enhance your credit line.
  5. Consolidating loans: Oh, you have tried everything to fix your debts but to no avail? Why don’t you contact a third party that could offer you a consolidation loan? It can lower the monthly costs without adversely affecting your credit. And you’ll find it less stressful to deal with one lender and one payment, rather than multiple credits and payments.
  6. Bankruptcy: In order to save your small business you can use the option of bankruptcy as a last resort. Being a costly and complex process, bankruptcy requires you to hire a seasoned bankruptcy attorney.

These tips can help you settle down your small business debts. However, these is no replacement for a professional who can provide you with tailor-made resolution options.