Although incurring financial risk is a part-and-parcel of running a business, staying in debt is never a wise move. Especially when there are various tried-and-tested strategies that can help you close the loan quickly. Wondering how? Well, here are five ways you can pay off business debt faster.
#1 Cut down unnecessary spending
You can start with identifying the areas that got you into debt in the first place. Then, try to make these areas more efficient or eliminate them, if unnecessary.
For instance, if you’ve been spending too much on office space, you can allow some of your employees to work remotely. Or, if advertising expenses are straining your monthly finances, you can opt for cheaper marketing channels such as social media or blogging.
The idea is simply to save money on unnecessary expenses until you’ve paid off the entire debt.
#2 Create a better budget
Another proven way to close your business debt quickly is to prepare a budget for every business operation and stick to it. You can use the zero-based budgeting method of allocating your income towards expenses, savings, and debt payments. Under this method, you must justify all your expenses at the end of each accounting period. Meaning, your accounts should show a clean sheet where Income – Expenses = Zero.
If you make higher profits in any given month, you can use the surplus to pay off more debt.
Additional Read: How will the Union Budget 2021 Impact the SME Sector in India?
#3 Try to generate more revenue
There can be no better way to close a business loan quickly than to make more profits from your business. Try raising the prices of your products or services, upselling to customers, or optimising the inventory to focus on what’s selling the best. You can also identify and sell your products and services to newer, more lucrative markets or change your current marketing practices to those offering better results.
#4 Opt for debt consolidation
Debt consolidation is advantageous if you have several loans you need to cover. This is because it consolidates all your loans into a single one for better debt management. Debt consolidation may even let you bag lower interest rates, thereby reducing your monthly EMIs. Plus, instead of juggling multiple payment deadlines, you’ll only have to keep track of one every month.
#5 Negotiate with lenders
If you feel that your debt structure is not working out, renegotiate the terms with your lender. Your lender may readjust the loan terms by lowering the interest rate, especially if you’ve been repaying the EMIs timely. Depending on your borrowed amount and existing loan terms, you can work out a mutually beneficial agreement with the lender.
Additional Read: Top Things Lender Considers While Sanctioning a Business Loan
Over to you
One thing that can spare you from getting in a fix is choosing the lender wisely. If you want to take advantage of relaxed eligibility criteria, affordable business loan interest rates, and flexible repayment options, choose Tata Capital – India’s leading lending institution! Whether you need funds for business expansion, purchasing inventory, or installing the latest equipment, we’ve got you covered.
Know your EMI amount in advance by using our business loan EMI calculator online. Get the complete loan details here.