It’s normal for businesses of all sizes to have debt. After all, many businesses wouldn’t get off the ground without business loans.
It’s when this debt becomes crippling that it can affect your business’ viability. Heavy debt is one of the main reasons that small businesses fail.
Ways to reduce small-business debt
By managing and limiting your debt you can stop it from becoming a liability that threatens your success.
1. Assess your debt situation
Take stock of your debt and how it’s affecting your budget.
Draw up a repayment plan and calculate how long it will take to pay off any debt that’s eating into your profit. This will help with the next step.
2. Re-examine your budget
Re-evaluate your budget to see how you can pay more towards your debt in order to reduce it.
Even small adjustment to your monthly debt repayments can reduce the length of your repayment term.
3. Reduce expenses
In order to free up some of your budget, look at areas where you can reduce expenses related to business operations.
Reduce expenditure on office supplies or outsource services instead of hiring new staff, for example.
4. Negotiate interest and fees
Debt accumulates when loans or credit incur unreasonable amounts of interest or fees.
Do your research and negotiate terms when taking out loans or applying for credit facilities so you get the best deal.
5. Consider debt reconstruction or consolidation
If you have multiple sources of debt you can consolidate them into one loan with a more affordable single monthly repayment.
A debt-mediation service can restructure and consolidate your debt by negotiating with lenders on your behalf.
6. Avoid using credit cards
Credit cards have high interest rates and should be used only for critical expenditure.
Try to pay for smaller business-related expenses with cash to avoid increasing your credit-card debt and interest.
Short-term business loans from lamna
At lamna, we offer short-term loans that are secured by a business asset, such as a vehicle or commercial property.
We’re accredited with the National Credit Regulator (NCR) and the Financial Services Board. We have branches in major South African cities.
Asset-based loans are short term and secured by an asset your business already owns, which means the risk of debt that’s impossible to repay is relatively low.
It’s also debt with a short repayment period, so it doesn’t hang around and cause cash-flow issues.
Other reasons to choose lamna for a short-term business loan include:
- our interest rates are competitive and fall within NCR guidelines
- we don’t charge hidden fees or early settlement penalties
- we don’t share your details with credit bureaux or other third parties
- your assets are valued by independent appraisers
- funds are transferred to your account via EFT, typically on the same day you apply.
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