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Simple Steps to Get Rid of Small Business Debt and Get Your Venture Back on Track

>> Nov 24, 2017



It can be a really tough job managing small business cash flows and often things may go out of hand and you may be forced to skip the scheduled repayments of the loans. Since loan defaults can have a severe adverse effect on your venture and can even put you out of business, it is important that you know how to get on top of the debt.
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Assess Your Finances and Alter Your Budget

Start off by understanding thoroughly your current financial condition. Find out whether you are making a cash loss or profit, and analyze your budget threadbare so that you know all your income sources as well as planned outflows.

Reduce Expenses to the Minimum

Once you know your cash flows, you should take a hard look at all operating expenses. Decide which expenses are vital to business survival and get rid of the rest. Pay special attention to expenses for services that you rarely use and negotiate better rates and terms from your suppliers. Make do with the leanest manpower possible and lay off the rest till things improve. Slash your own salary to give your business a better chance.

Stop Leveraging Debt

At this point in time, it is vital to stop using additional debt to run your business. Switch to cash; you will then automatically spend on what is absolutely necessary. However, if you are planning to restructure debt, it may be wiser to have more cash on hand, so get professional advice before you start using your cash. 

Consolidate Your Loans

Use loan consolidation to sweep all your loans into one loan so that you are left with only one loan to manage. Loan consolidation also allows you an opportunity to restructure your loans so that you get lower rates as well as longer time for repayment to make the monthly payment more affordable. Credit card dues can be transferred to a zero-interest card by a balance transfer to give you respite from interest rates for a 6-month period. Seek advice from a professional agency like for the best solutions.

Negotiate with Creditors and Lenders

When your business runs into tough times, you are not the only one in trouble; your lenders and creditors also have a stake in seeing your business prosper. Explain to your lenders about your situation and request them to lower the interest rates. This method works well also if you have lots of credit card debt but have been paying your monthly dues regularly. If you have multiple loans, focus on lowering the highest interest rate first.

Conclusion

While all the methods of getting control over your debt are effective in the long run, only by ensuring that your business does well that you can think about sustained profitability. You may need to diversify your offerings, raise or lower product prices, improve trade margins for better market penetration as well as follow-up on your receivables to ensure that your business can flourish and leverage debt to the maximum without defaulting. 

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