What to do When Your Small Business Is In Debt

Borrowing money is standard practice among small businesses, particularly during the initial stages, and when a company flounders at any point along the way to financial success. The adage, “it takes money to make money” is true – and rarely do people have the private funds to finance their endeavors or pay for the necessary hurdles that can thwart an up-and-coming business.

The common solution? Taking out a small business loan. The challenge lies in knowing how much money to borrow. Too little, and you won’t have enough to get off the ground; too much, and you’ll risk drowning in debt.

drowning in debt.

How to Keep From Drowning in Debt

Once you’ve established that you’re at risk for your debt being too much for you to handle, the question is how to get out from under it before it gets the better of you.

Here are 4 techniques to help conquer your debt:

  1. Cut costs. First and foremost, go over all of your business expenses and figure out what is truly essential for the functioning of your company. If it is not critical, eliminate it – at least for the time being. If you have an annual company-wide breakfast, cancel it, or scale it back dramatically. Check your contracts for phone, internet, and business-specific subscriptions, and try to negotiate for better deals, and for the latter, freeze or cancel your subscriptions wherever possible.
  2. Find new business. If you can increase the funds you take in, you will have the advantage of closing the gap between the finances you have and the finances you need. Contact your customer base about increasing their use of your services and to increase your networking possibilities to help bring in new customers.
  3. Negotiate your standing with creditors. Strictly speaking, your bank is not your only source of a loan. Each supplier and provider who bills you has the potential to be your debtor. Nip any hesitations they may have about you in the bud by contacting them to inform them of your current financial woes. You may be able to negotiate a partial-payment plan that will decrease your monthly load by enough to let you manage your expenditures.
  4. Consolidate your business loans. As with any loan that threatens to overwhelm, debt consolidation can be the means by which you manage your debt, and minimize the fees associated with it. That is, work with your bank to combine all debts into one, with only one “payment due” date, with a set amount that you can afford. By paying back everything on a set schedule at an affordable rate, you extend the amount of time you remain in debt to the bank, but you have established a means of conquering your debt load.

financial savings.

Save Your Business

The U.S. Small Business Administration (SBA) claims that approximately 50 percent of small businesses fail within the first five years of their founding. You don’t want to be among them, so take every measure you can think of to reduce your expenses, consolidate your debt, and increase your income. With some concerted effort, you should be able to bring your company out of the red and into the black, which will enable you to thrive – isn’t that why you founded the business to begin with?

For those who have found themselves in a financial situation that is more they can handle, and decided to take a 6 easy ways to calculate your monthly loan payment to get your business out of debt faster.


  About Naftali Feig  

 Naftali Feig holds a bachelor’s degree in finance as well as an MBA.
He has over 15 years of professional experience in financial management, reporting,
and project management. He has worked as a controller and operations manager
and owns his own real estate investment company. He believes relationships are
the key to a successful business. He currently provides consulting and solutions
to entrepreneurs starting their own brokerage businesses.




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