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4 Ways to reduce small business debt

Are you in the process of paying down debt on your small business? Maybe you’ve had to turn to your charge cards or maybe you had to take out a business loan to fund your venture. Either way, you aren’t alone – 88 percent of small businesses carry debt.

In the long run, debt can hold back your small business. The majority of business that fail cite cash flow issues as the reason. This is why small businesses can benefit from using strategies to reduce this debt, allowing capital to go to business growth. Take a look at these four ways to reduce small business debt.


Evaluate your spending

You need to know exactly what you’re spending your money on – much more than a vague idea of your monthly expenses. Take the time to figure out a detailed breakdown of everything your business purchases. Don’t go by the adage “you need to spend money to make money” and get careless with your cash. When you have debt hanging over your head, it’s time to cut back on the things that aren’t necessary and only purchase what you need for day-to-day operations.


Revamp your budget

Once you’ve eliminated those unnecessary expenses, it’s time to review your budget line by line to figure out how much cash you can put toward paying off your business debt. It will help to make a spreadsheet with your remaining expenses and rough income for each month. You can also reevaluate your product or service pricing to ensure you have a solid profit margin.


Commit a certain amount of money to put toward debt payment and place that on the spreadsheet as an expense. Don’t tell yourself you will just pay what you can and make it an option. Instead, make a specific plan so you’ll follow through. In the meantime, continue to use proven tactics to increase conversions so you’re still generating a profit.


Consider debt consolidation

Debt consolidation loans reduce your monthly payments and can provide some relief if you’re paying multiple creditors. You may also be able to obtain a lower interest rate. When you consolidate your debt, you’ll make a single payment each month so it’s easier to manage your bills and less likely you’ll miss a payment.


Keep on going

A major mistake small business owners make when they have debt is slowing down and becoming stagnant. Continue to still take some risks and don’t avoid everything due to fear of further debt. Calculated risks can result in an increase to your monthly revenue and actually help you pay off debt faster. Keep on trucking and remember not to lose sight of your business goals.


An important part of paying down your debt is coming to the realization that you cannot continue what you are doing. If you aren’t lowering your debt, your interest charges will continue to rise. The first part of repairing your financial situation is to find the best debt-reduction method that fits your needs. Once you make a plan, it’s only a matter of dedication and commitment to sticking with those methods and paying off your debt.

Megan Totka

Megan Totka is a freelance writer, business expert and consultant. She was the marketing & editorial director at for over a decade. As a business expert, she specializes in reporting the latest business news, helpful tips and reliable resources, as well as providing business advice. She has significant experience with the topic of business marketing, and has spent several years exploring topics like copywriting, content marketing, list building, social media and any hot topics to help businesses run their business successfully. When she's not writing articles to educate businesses on the vast importance of building up their web presence, she likes to keep her finger on the pulse of the latest small business products, services, apps and other reviews. With a strong suit for managing business partnerships and developing partner relations, she often cultivates topics around the partnerships she's established by reviewing and highlighting what makes each business unique. She prides herself on keeping up with the diverse variety of services each business specializes in to spotlight new offerings.

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