Do you own a small business with debt? Are you worried about how you are managing your business debt? Don’t rely on loans to get you out of debt. We have 5 tips that can help you deal with your existing business debt.
1. Evaluate Your Spending
Having good money management habits will help you in your personal and professional life. This is why you need to evaluate your spending habits. This will give you a very clear picture of where your money is going and will help you create a working business budget. Be sure to review your budget and credit reports on a regular basis. You can also monitor your automatic payments and spending.
2. Cut Costs
The best way to eliminate any unnecessary business costs is to have a detailed accounting of your business systems. Look at your inventory, purchases, and any other expenses for your business. Just like with personal debt, you will need to take a serious look at what is necessary and what is not. Like a personal budget, the money you save can be reallocated in your budget to pay off your debts. You want to avoid any expenses that are detracting from your business’ function and profits. Examples of areas you can look at for cutting back: cleaning services, corporate mobile plans, and/or pricey office spaces. Remember, make the cuts that are not pertinent to your business’ functions or are barely contributing to them.
3. Focus on Profits
Don’t lose sight of the function and growth of your business while dealing with debt. Making sure that the majority of your efforts remain with your business growth, will help you increase cash flow and profits. You may want to try new strategies or find ways to boost your new leads. If you lose sight of growing and maintaining your business, you are less likely to keep on top of the things ensuring your business’ longevity.
4. Refinance or Consolidate
Another option for consideration is refinancing your existing business loan. When you refinance a loan, you replace an existing loan with a new one. The idea is to take the new loan and use it to pay off your current debt. In most cases, you can get lower interest rates and better payment terms. However, it is important to understand that even if you refinance, your loan balance will not change.
If you have incurred multiple debts like credit cards, payday loans, and/or a working capital loan, you may want to consider consolidating instead. This combines the debts into a single payment, making it easier to pay off your debt. Keep in mind that your credit score may be lowered temporarily, but may provide better terms and interest rates.
5. Speak with a Bankruptcy Attorney
Speaking with a qualified bankruptcy attorney will provide you with the best options for what to do with your business debt. There are options available for continuing your business and filing for bankruptcy. You may be able to file under Chapter 7 or Chapter 13. So, contact a qualified bankruptcy attorney to see what will work best for you and your business.
Need More Information?
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