Business Debt Relief: Top Tips to Help Get Your Business Out of the Red
When it comes to managing any small business, borrowing funds is one of the only ways to ensure you can expand your business. However, if you accumulate too much debt you can go bankrupt. In some cases, investments we pay for with borrowed money don’t provide the kind of return we expected.
If you’ve found yourself in this unfortunate situation, don’t worry just yet. There are a number of things you can do that will help get your business out of the red. Following some of these business debt relief tips will help to get your head back above water.
Take Stock of Your Current Debt
Your first step should be compiling a list of all your current debts. This should include any business loans, business credit cards, all lines of credit, and any debts you may owe to suppliers.
Next up, you will find it useful to the organise any outstanding debt by interest from highest to lowest, as it makes sense to pay off the high-interest debts first. If you have any outstanding debts that may affect crucial business relationships, pay these first.
In most cases, you should aim to pay off any dents within a 12-month period. You should always use this timeframe when borrowing any funds.
Pay Off High-Interest Debt First
When it comes to getting your business out of the red and into the black, you should always aim to pay off any high-interest debt first. As well as paying off these debts first, you can also try to help reduce high-interest rates, as this can save you thousands.
Consolidate Any Outstanding Debts
If you are struggling to pay back a number of high-interest debts, you also have the option of applying for a consolidation loan. It’s always important to research this type of loan before you sign any documents, as some consolidation creditors will not offer you a good deal.
It is a good idea to utilise a debt payoff calculator to help you determine how much interest you will be charged on your individual loans if you do not choose to consolidate your debt.
Recalculate Your Business Budget
In some cases, a business could potentially be racking up debt due to ongoing budgeting errors. Most businesses will choose to plan their budget when the company’s finances are healthy. Then, months later, the company’s finances take a hit, however, the same budget is still used.
Take the time to look over your budget to establish exactly where your money is going. If it is necessary, you will need to come up with a completely new budget that better reflects your current financial situation.
Find a New Investor
If you’re struggling to pay current debts, finding a new investor to inject some much-needed capital into your business may be a great idea. Private equity investment can offer capital as well as the expertise required to turn your business around. Firms like Goodwin can help advise both innovators and investors across the private equity sector.