Here is How You Can Deal With Your Small Business Debt

Are you a small business owner who worries about his business debt every time? Well, that’s a common scenario. No business owner loves to take loans but situations and circumstances change leading your business to face severe consequences where the worst possible scenario would be declaring bankruptcy. The modern laws have even made it more difficult to declare a simple bankruptcy as compared to earlier times. Hence, great financial management is truly not an easy task these days.

Declaring bankruptcy can cost you thousands of dollars along with attorney fees for the court. Plus, your business reputation is harmed when you declare bankruptcy making it impossible for you to regain your business. You might wonder what is the solution?

Thankfully, there are various ways you can tackle this financial situation to save yourself and your business from any disaster. Continue reading further to know more!

  • Know what you are doing when taking a loan

If you are a small business owner planning to get a loan to secure your business, you must calculate your debt coverage ratio before you apply for a loan. If your debt coverage ratio is below 1.15, you must consider ways to increase your cash flow. Try to get a large loan only if your debt coverage ratio allows that. Otherwise, you will be struggling with paying off your debt.

  • Improve your cash flow

cash flow

The best way to pay off your debt would be to increase your cash flow. There are many ways to increase your cash flow to pay down the debt of your small business.

Expanding employee skills through preparing or presenting another innovation can be an incredible source in expanding the benefits of your company, and can help in making your team more qualified and professional.
Expanding more budget on your marketing which can get you better sales and increased revenue, leading to improved cash flow.
Ask your clients such as vendors to process payments earlier than usual. Offer them reasonable discounts if you can to ensure they pay on time. It is found that companies that offer e-commerce solutions can be talked into early payments.

  • Secure your debt right away

As the interest rates can always fluctuate, you should be aware of your next steps. If you hear news of interest rate on loans rising anytime soon, fix your fixed-rate interest loan right away before the prices go up. The lender will be bound to receive a lower interest rate for a certain duration even if the prices go up.

  • Consolidate all your loans

You can consolidate all your different loans with varying interest rates into a single low-interest loan which could facilitate you with easy payments and saving a great deal of money on interest rates. Hence, it is one of the fastest ways to lower your interest rates and also helps you in paying off your debt even quicker.

For example, if you are currently paying a total of $900 interest on your two different loans, you could easily lower it down to $600 if you consolidate both the loans. This will save you one-third of the money and you can pay off your debt easily.


What we think is that getting your payments as early as you can is the most essential step in paying off your debt quickly. You definitely need a great invoice app to handle all your accounts and finances. Take any and every help possible from technology to sustain and grow your small business.