Starting your own business can be an exciting time. But if you’re struggling with debt, the joy of being a business owner is overshadowed by the stress of your financial situation.
As you probably know, small business loans are not easy to obtain. Lenders are often picky about who they will lend to, leading many small business owners to use their own funding in the form of business and personal credit cards, loans, etc., for starting capital. This can unfortunately result in large amounts of debt accompanied by high interest rate charges.
PCS Debt Relief specializes in both consumer and business debt relief and can help you choose the best solution to fit your needs. In the meantime, here are some tips on eliminating small business debt:
Evaluate Your Debt
It won’t be fun, but sorting through all your debts is a crucial step in getting rid of your business’s debt. This means taking an inventory of your business loans, personal and business credit card debts, and any payments you still owe to your vendors. Take care of the debts that have the highest interest rates before paying off the next balance with the second-highest interest rate. This is called the “stack method.” And don’t forget to create a deadline for repaying all your debts. Ideally, you should aim to have all your debts resolved within a year. This will lower the chances of your business going into bankruptcy.
Re-evaluate Your Budget
Just like you would with your personal finances, you need to determine what you can cut out of your business’s current budget. Write down what you’re spending on a daily, monthly, and yearly basis. There are obviously components of your budget you can’t eliminate completely, like the rent/lease of your business space. But you can sell any equipment you’re not using, downsize to a smaller space, and perhaps even downsize on staff. See if you can negotiate expenses with your vendors – this may be more effective if you have contracted with certain vendors for a long time and have established loyalty.
Rake in More Funds
It’s easier said than done but you’ll need to increase sales numbers to get back on financial track. A simple way to do this is increasing the price of your products/services or if you have the resources, create a strong web/social media presence for your business. The more people that hear about your business, the more likely you will have new customers take a chance on you.
Get Outside Help
It can be overwhelming to sort through your debt problems on your own. Consider hiring a debt settlement firm to help you identify if debt restructuring, debt consolidation, debt settlement or filing for small business bankruptcy is the best option for you.
In short, debt restructuring involves renegotiating the terms of your financing agreement with your lender. This can mean having the option to change your payment due dates, interest rates, the length of your payment period, and more.
Debt consolidation means refinancing your existing debt by putting your higher interest rate unsecured debt into a single loan and paying it off in a single monthly payment. This can be done using credit cards or a debt consolidation loan.
Finally, debt settlement involves negotiating your existing debt into a smaller debt amount. This will be paid in a “lump sum” to your creditor.
If you need help managing your business’s debt, PCS Debt Relief can set you on the right path. We are here to listen and are ready to help you and your business achieve financial freedom. Contact us today for a free consultation.