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With prices on the rise and lenders tightening the availability of borrowing, many small
business owners are straining under a weight of growing debt. In recent years, there
has been a massive increase in businesses throughout the country filing for bankruptcy,
but while this move can allow you to salvage your company, there is a steep price.
Fortunately, there are some ways to deal with your business debt without resorting to
filing for bankruptcy.
Cut Your Unnecessary Costs
The first step in dealing with your debt is to streamline your expenses. Attacking your
unnecessary costs will allow you to identify the parts of your business that are pulling
you into debt. If your expenses are too high or you have customers who don’t pay on
time, you need to cut costly phone systems to free up cash and use it to ramp up your
collection efforts.
Revisit Your Budget
If your finding your business debt continues to pile up, then it’s likely your current
budget isn’t actually working. You need to revisit your budget and make changes based
on the current financial situation of your business. You need to ensure that your
business revenue is sufficient to cover your variable and fixed monthly costs. You can
then devote excess funds to paying down debt. For example, if your business has credit
card debt, be sure to pay more than the minimum; otherwise you’ll be paying it for
years. It is worth investing in accounting software to keep track of your budget and keep
everything on track.
Prioritize Your Repayments
To get a handle on your debt, you need to tackle the debt at the highest interest rates
first. This is likely to mean that you concentrate your energy on paying down your credit
cards, but if any of your business debt has been personally guaranteed, this should be a
high priority.
It is important to speak to your creditors to explain your current business hardship.
Often they will provide a hardship plan with better terms. The less your creditor is willing
to accept, the faster you can pay them. Just remember that the worst thing you can do
for your finances is set up a creditor repayment plan and then default.

Consolidating your debt into one payment will allow you to reduce your monthly costs
without impacting your credit. In a best case scenario, you may be able to consolidate a
credit card and shorter term loans into a long term package with a more preferable
interest rate.
Seek Professional Help
Negotiating with your creditors can often feel like a harrowing experience. When you
have creditors who are unwilling to work with you or are being difficult in appreciating
your situation, a professional finance specialist can help. Professionals have experience
working with small business owners and potentially complicated debt issues to help you
negotiate better payment terms with your creditors. A professional may even be able to
help you to identify inefficiencies and streamline your expenses to allow you to funnel
more money into your debt repayment. It is important to be realistic about the situation
and if you are struggling, seek out some help.