Effective Ways of Paying Down Small Business Debt

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Small business owners would be under the burden of ever-mounting debts maybe if they have to deal with late-paying clients or in the event of a drastic reduction in company sales. Likewise, various other issues could be leading to small business owners being weighed down by insurmountable debts. However, the heartening news is that wherever there seems to be a debt, there also exists an effective strategy to deal with it. Here are some of the best ways of paying down small business debts making sure that you would not have to give up the organization, you have built with so much dedication and hard work. Moreover, these are some of the most effective ways of paying off your small business debt without at all, destroying your credit.

Snowball Method

The snowball method is a frequently used and a popular debt reduction tactic which would be involving first paying off relatively smaller balances and gradually handling larger ones. The best way of tackling your debt is once you pay off the smallest balance, consider paying off the very next lowest amount that is due and at the same time add your previous debts’ precise minimum payment on your new one. By the time, you are all set to pay off all larger accounts; you seem to be having more available money to do so.  You must remember that snowballing works out best for credit debts such as credit cards. If you are choosing the snowball method, never forget to pay off the minimum amounts.


Just like personal consumer debt consolidation, small business owners would be combining multiple business loans that are having diverse interest rates into one single loan at a lower rate. A debt consolidation company would be typically negotiating the new loan interest rate and collecting the payments that would be used for paying previous creditors. In this manner, business owners would be taking out one single new loan for replacing the earlier ones. Debt consolidation is a great option as it allows you to pay overall less interest rate. It would be instrumental in saving a lot of time as you would be paying only one bill every month. You must do ample research and then choose the perfect method of debt consolidation for bad credit loans.

Cost Cutting

If you desire to cut down your small business debt, you must take effective steps for limiting your spending across all portions of your business.  In addition to selling off unneeded equipment and assets, SMBs could consider reducing costs by restricting the workforce size and boosting sales with the use of novel and innovative marketing endeavors. Moreover, small businesses would be talking to suppliers for negotiating low costs. In some cases, customers would get discounts from suppliers if they shift to them instead of their competitor and even in some cases, your customers would be paying the pending prices ahead of schedule.

Stack Method

This is the real opposite of snowballing and this involves paying off your debts first the ones with highest interest rates and gradually paying off the debts with relatively lower interest rates.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy lets businesses to chalk out an appropriate repayment schedule. The small business holders could cut down effectively a part of their forthcoming income for about a period of three years to almost five years till the debt is fully repaid.


Dealing with your small business debt could be quite a challenging and stressful affair. However, there are several ways of minimizing or eliminating the burden without the need for the owners to opt for bankruptcy. Do ample research for determining the best technique of debt reduction suitable for your small business.

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