Savvy ways to reduce your small business debt

By Henry Brown

Is your small business struggling to keep its head above water due to debt? If so, you are in very good company – almost half of all small business owners state that they have issues with their current debt levels. And let’s be clear, when you are trying to run a business, it can be incredibly challenging to face up to the extra pressures that over-borrowing can bring. With this in mind, here are a few ideas on how you can ensure you steer away from bankruptcy and towards solvency – and, eventually, growth. Let’s take a closer look at some of your options.

Establish types of debt

Of course, the reality is that borrowing to invest in your business is part of the business lifecycle. And in no way is all debt bad – as we have highlighted here. The trouble is when things get out of control, and you aren’t making enough money to cover all your financial responsibilities. Ultimately, your debts need to have a value or something you can make money from – on top of your repayments. So, the debts we are discussing here are the ones that are out of control, affecting your bottom line, and need addressing sooner rather than later.

Talk to your lenders

Business debt is different to personal debt. You might be borrowing from suppliers, for example, rather than just banks. So it’s vital that you approach your creditors – whoever they are – as your ability to make a profit could depend on it. Many vendors and creditors will be happy to renegotiate terms with you, as long as you can show them how you intend to pay them back. For example, you might be able to change a supplier’s accounts payable period from a couple of weeks to several months, which will improve your cash flow. Or, you could request lower interest rates from your business credit card issuer to ensure that amount isn’t snowballing.

Future-proof your debts or consolidate

If you have high debts and have variable interest rates, it might be worth moving them to a fixed-rate alternative to avoid any general interest rate rises. Alternatively, you can lower your interest rates by consolidating your entire debt – instead of paying varying interest on a range of loans, you can put them all into one single loan and pay the lower rate instead. Of course, if you do go down this route, it’s essential that you do the math and ensure you won’t be paying more than you did originally.

Increase productivity

Finally, if you can turn your business into a more efficient operation, you will make more money. And in turn, you will be able to pay down your debts in a far quicker manner than before. Outsource work to freelancers or third-party companies to generate more revenue. Increase your employee’s skills by training them up and making them more productive. And look into new marketing initiatives, too, to drive more sales. Sustain that extra revenue, and your bad debt load will soon be a thing of the past.


Henry Brown is an online marketing executive. When he isn’t talking shop he’s roaming the streets of London, uncovering the extra-ordinary in the ordinary.

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