5 Ways to Quickly Pay off Business Debt

But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. You can start marketing your business with some creative, low-cost strategies. Tayne suggests personable, memorable and eye-catching social media campaigns. Your business doesn’t have to go full steam ahead right away.

Cutting costs by selling off equipment you no longer use, downsizing or splitting costs by sharing resources with other companies can also help you get out of business debt faster. If you get a loan that doesn’t have a lower interest rate than what you’re paying now, you could end up paying more than what you currently owe. If you can’t secure a lower interest rate, business debt consolidation might not be worth it. Those with higher interest rates stand to save the most by consolidating business debt into one loan. But this may not be the best option for every small business owner.

Myths About Business Debt (and How to Bust Them)

If you make higher profits in any given month, you can use the surplus to pay off more debt. Kristie Lorette started writing professionally in 1996. She earned her Bachelor of Science degree in marketing and multinational business from Florida State University and a Master of Business Administration from Nova Southeastern University. Her work has appeared online at Bill Savings, Money Smart Life and Mortgage Loan. Think of our writing team like your Yoda, with expert finance advice you can trust.

The worst thing a business owner can do is set up a repayment plan with a creditor and default, he says. Yet before I appeared on CNBC’s The Profit, I was on the hook for over $100,000 in debt and quite frankly didn’t have a penny to my name. My credit cards were maxed out, my bank accounts https://www.scoopearth.com/the-importance-of-retail-accounting-in-improving-inventory-management/ were overdrafted and paying bills was a monthly struggle. Depending on your repayment terms, you could end up with a lower monthly payment. You can take the difference from what you were paying on multiple loans and apply to the single consolidation loan to repay it faster.

The Small Business Field Guide

Just ask Dave Ramsey, who has built an eight-figure business empire without incurring any debt. He rents until he can pay in cash, outsources to avoid debt, and buys used instead of new to save a considerable amount of money. Unless you suddenly see a massive increase in revenue, you’ll have to find a way to cut costs in order to free up money to pay off debt. You can do this in a variety of ways, but one clever strategy is to hire your spouse. Sometimes it’s helpful to look at debt from the perspective of the creditor.

By continuing you give us irrevocable consent to contact any business or partner we may use including lenders, banks, credit reporting services or may use in the future. What happens is that your personal credit will suffer. Even if that happens, there are still business debts for people on bad credit. If there is no chance of your business recovering, forget its unpaid bills, especially old bills. Chapter 13 bankruptcy – This is the best option for a sole proprietor. Chapter 13 is only allowed for sole proprietors and individuals.

What is a debt cycle, and is your business in one?

The key is to make sure this method doesn’t just free up maxed out lines of credit and get you in an even bigger hole. Business debt consolidation is when you take out a new business loan to pay off your existing business loans and debt. By taking out a small business debt consolidation loan, you’re moving many debts into one streamlined monthly payment. The tips outlined above should let you effectively reduce business debts and positively restructure your business approach and income streams.

• But you may still have some nagging doubts that could trip you up.
• Sure, it’s tempting to borrow money for what seems like a once-in-a-lifetime or foolproof opportunity—but don’t do it.
• Debt consolidation is advantageous if you have several loans you need to cover.
• Look for anything that you can cut out of your budget to save money.
• Starting today, you can begin to create a profitable business model.
• Those with higher interest rates stand to save the most by consolidating business debt into one loan.

With the right strategy — such as offering a volume discount on large orders — you can do this without losing customers. Volume discounts can help your business stay competitive, according to the Harvard Business Review. She led multiple NerdWallet teams focused on personal finance before being promoted to deputy director and then director. She originally joined NerdWallet as a writer, covering small business.

Automate your debt payments

However, facing unmanageable debt does not mean that you should close down. You can still find a few ways to get out of paying the debt. construction bookkeeping If your business is carrying debt, now may be a good time to consider trying to pay it down, pay it off, or perhaps restructure it.

• But if you’re like a lot of other business owners, you might have trouble believing you don’t need debt to run a business.
• To get a sense of your current financial standing, you need an up-to-date picture of your finances.
• These business debt balances can increase due to interest accrual, late fees, and other charges related to unmet payment schedules.
• If you feel like your debt payments are getting out of hand, then it’s time to consider options for business debt relief.
• However, if your business has more debts than assets, you may not be able to find a buyer.
• Consumer debt is money borrowed by an individual, family or household for personal purchases like a car or a computer.