Debt: The Common Problem

It’s common knowledge that running a small business is no simple matter. A financial investment as well as an emotional one, costs can run high, and fewer than 10% of small businesses make a profit within the first year. In the year 2006, around 1.9 American businesses declared bankruptcy. It’s easy to fall behind, and easy to get into debt – so what can you, as a small Business, do to get out of it? There are options for almost any situation; online debt agencies, debt counseling, and financial aid are a few of them. All it takes is a little research, investigating what options are out there, which pertain to your situation, and which solution is right for your business.

Debt Relief Counseling Services

One of the most important resources for small businesses struggling with debt is a debt relief counseling service, who can examine your situation and help you find a solution that’s right for you. Money Management International – at www.moneymanagement.org - may prove an excellent resource for small businesses looking for options and information for relieving their debt. This counseling service offers both on-line and over-the-phone counseling services, and information that is specific to not only your business but your location as well (they have special info for all 50 states.) The ‘Financial Tools’ portion of their website offers an easy Loan Payment Calculator and other tools to help you get back on track.

Whether you seek help from an online service or a local debt relief counseling center, there are a few important things to organize before you go get help. Your total annual business costs, total debt, credit cards, vehicle payments, etc, should all be filed and organized for referral throughout the counseling session. In addition to helping with your business financial needs, many of these firms will help you with other needs as well, including health insurance, vehicle finance, and day-to-day living costs.

Small Business Loans

Taking out a loan to get rid of debt may seem like a lose-lose proposal, but in our economy, it is not only common but necessary. Because most citizens live their day-to-day lives in the red, it’s no surprise that businesses must do the same thing; sometimes, getting into debt can be the only way to actually make a profit. Sometimes getting into debt – as strange as it may seem – is the only way to get out of debt.

Consider, as an example, student debt. A young man working a 40-hour job at $7 an hour can choose to go into debt in order to pay for a college education, after which his income will increase to $70 an hour, which he will use to pay off his student loans. The same young man, reluctant to go into debt, may refuse to take out a loan but prefer to scrimp and save until he has enough money to pay for his education: a process that, at his current salary, will take several if not dozens of years.

The same rule applies to small businesses. In some cases, taking out a loan may give you the necessary push to become successful, thus giving you the opportunity to pay off the loan. There are numerous options for small-business loans, from government subsidies, to bank allowances, to online lending firms. Receiving a low-interest loan may help you pay off your high-interest finance rates, thus allowing you to consolidate all of your debt into a single, low-interest pool. One website, www.curadebt.com offers a personalized form for you to fill out concerning your situation, and then tailors their debt relief plan to suit your needs.

Ways to Reduce Small Business Debt

Sometimes, the little things can make a big difference; in order to effectively reduce small business debt, you must also reduce small business costs.  This can be done in a variety of ways – from financial, to practical. Little things, such as finding a good, low-cost phone plan, can really affect the amount your business costs each month. Electricity cost is another huge one; make sure to streamline the efficiency of your business by taking time to address energy savings. Of course, it is essential that you also streamline financially – if your current debts are in anyway connected to a high-interest loan or credit card, the first and most essential step is to find a new card or loaning agency, consolidate your debt, and reduce your interest. Just a 5 percent interest reduction could cut your payments almost in half – which means that if you switch out that 18% APR for a 10% one, it will make a huge difference in cutting down on small business debt.

Another crucial step to reducing costs is to examine your customer market; to you need to reduce prices? Raise them? Who are your customers, and what do they need to come flocking to your small business? Taking just a little time to evaluate business factors, talk to a Debt Counseling Agency, and consolidate your Small Business loans is all it takes to take your business out of the red and put it onto the road to success.