4 Strategic Ways to Effectively Manage Your Small Business Debt

Are you afraid of drowning in a swamp of debts but have no other choice but to get a loan to open up your business? If yes, we listed down 4 strategic ways to effectively manage your small business debt.

Well, this fact shouldn’t be a burden. Not everyone who starts a small bsuiness don’t have enough funds to launch it. Many owners needed to take on a loan from private lenders or banks that probably amounted to thousands of dollars.

While this seems very risky, if you know how to manage this borrowed capital, you should be free of worries and pay back the debt in no time.


To ensure that your business won’t fail because of growing interests from an unpaid debt, you should review all the methods to earn funds to pay your loan. From eliminating unneccessary extra costs, lowering your budget for each department, going paperless to cut costs, and formulating efficient payback plan; these are all strategies on managing your bills so you can set aside some amount everyday to pay your debts even before they become unmanageable.

Another thing you would want to do is to inquire about all of your options for paying your small business loan up to the last cent.

But even after doing all these and you’ll still find yourself in debt, don’t panic. There are some ways you can do to save your business. Take action and manage what you owe. Here are tips on how you can control your debts:

Renegotiate for longer bank loan terms

Ask your bank (or your private loan provider) if there are options for the lenght of paying time. This will reduce the interest and the monthly payment cost.

You might be charged with a higher rate than the short term loans, but this will give you enough time to come up with a fund to pay your debt while starting to earn profits.

Be positive when negotiating. Explain how they will earn more from extending your payment term. Ensure them too that you have big plans to make your business grow which will be your source of funds of paying the debt in full.

Find ways to increase your income

Increasing your revenue when you just started is probably a grueling task. But there are ways on how you can make some cash to pay your debt and get back on track. This include:

  • Offering mark-down prices during your first-month celebration.
  • Giving discounts for cash payments
  • Getting to know your customers so you can tailor your products and services to satisfy their needs. This strategy will gain you repeat customers and may earn you the rights to mark up your rates soon.
  • Meeting with your financial planner or accountant so they can introduce more strategies you can use to earn more profit. They can also be your way to meet their clients whom you can turn into your customers.

Reducing business costs

Review your departments and see where you can cut costs. If available, use accounting software to list all your expenses so you can easily see where to make reductions. The areas you can cut your expenses from are:

  • Lease: See if you can lower the amount of space you rent.
  • Employees: Consider hiring contractors or short-term employees.
  • Supplies: Buy in bulk and ask for discounts from your suppliers.

Other ways to raise funds for your debts

It may be difficult to free your business from an initial funding debt, but you have these options to help you pay for the first few months, when you are not yet seeing any revenue:

  • Take a loan from families or friends

You have to acknowledge the fact that a business won’t make an ROI on its first month. Some will take 6 months to 3 years before they start making an income from their initial investment. And no one will know this better than your friends and families. Sometimes, when it’s difficult to raise funds for paying your monthly repayment, ask from your family to get favorable rates.

  • Liquidate assets
    This will be your form of collateral for the loan. Most lenders will accept it since they’ll want to be paid at least something. They will deem this much better than you not being able to pay when you go bankrupt.
  • Start looking for investors.

Find people who are interested to invest some money in your business in exchange of making 5% or 10% income from your monthly profit.

But still, a more effective way to manage your debts is to hire a competent bookkeeper who is proficient in monitoring your finances. Another benefit of doing so is that you don’t have to hire a bookkeeper for a full-time position. You can always opt to outsource contractual bookkeepers from EJS Accounting.

Find out more from Ecommerce Corporation about how you can prevent your small business from going down the drain because of unpaid debts.