6 Effective Tips To Banish Your Small Business Debt
Getting Out Of Debt
Completing professional training via the Scholars Int’l Institute of Technology is one way to boost your small business. But if debt is standing in the way of this or any other professional goals, you need to focus on taking back control of your finances first. That all starts with having the right information to guide you, including these creative but practical tips.
Cut Your Expenses First
There are many, many methods you can use to pay off debt. Before you dig into your options, reserve some time for minimizing your budget from this point forward. Here are a couple of perhaps surprising ways you can do so, without putting more stress on yourself:
Set Up an LLC
Tax debt is a common issue for new entrepreneurs in the tech industry and beyond, and it catches many of them off guard. A simple way to reduce this debt is to use a formation service to set up an LLC, rather than operating sans any sort of formal business structure.
You can have your LLC forms and fees filed in a matter of minutes, and you’ll also be cutting out the potential for pricey legal fees. Now before you make this move, clarify the LLC rules in your state to make sure that this structure is the right one for your business.
Ask for a Refund
Have you downloaded a paid app for your business that simply didn’t meet your expectations? If so, you can always try requesting a refund to recoup your losses. Every cent matters when you need to pay down debt, so don’t overlook this small but impactful financial move.
As a matter of fact, the same concept applies to any extra expense that may be causing you to lose out on income. Aside from unused apps, subscriptions may also be draining your wallet without you even realizing it. Try one of these apps to check for subscriptions and cancel them.
Then Start Working on Debt
With your budget and expenses under control, you can begin focusing on your debt. There are endless recommendations for managing debt, but these seem to be the most popular right now:
1. Snowballs and Avalanches
No, we didn’t just veer into talking about winter weather here. In this instance, the terms “snowball” and “avalanche” refer to two popular and different methods for paying down debt.
With the snowball approach, you start with the smallest debt for your business and then keep working until all debts are paid off. The feeling of accomplishment can be very rewarding. If you choose an avalanche approach, you focus on the debt with the highest interest rate.
Both have benefits for small businesses but no matter which method you choose, you also need to take the following actions in order to be successful:
● Make a detailed list of all debts currently owed by your business.
● Then arrange your list according to the payoff method you’ve chosen.
● Next, try to pay more than the minimum payment on each account.
● Finally, don’t forget to keep rolling over payments to the next debt.
2. Debt Consolidation
If you’re a busy entrepreneur, you may not have the time to dedicate to sorting through your accounts in such detail, which brings us to the next solution.
Using an umbrella loan to consolidate and pay off your debts may be a more practical option for you. You may be able to secure one of these loans from the SBA, banks or online lenders, and doing so will give you a single loan that is more manageable than a multitude of payments.
Be careful when consolidating debt. Always read the fine print, avoid offers with high interest rates and never borrow more than you can repay.
Don’t let debt keep you from reaching your business goals. Look for painless ways to cut costs, and then find the best solution for taking care of your small business debt. You’ve got this!
SIIT is on a mission to make tech education and professional training more accessible, so more people can show off their talents and take their tech careers to the next level.
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