After more than a year of navigating movement restrictions, mandates and Covid-19 protocols, small-business owners are starting to see a light at the end of the tunnel. But the debt many needed to take on to weather the pandemic still casts an ominous shadow.
In 2020, 79 per cent of small employer firms (up to 499 employees) in the US reported having outstanding debt, up from 71 per cent in 2019, according to a February 2021 report by the Federal Reserve Banks. Of the firms that applied for financing, 58 per cent said they did so to cover operating expenses such as rent and payroll, compared with 43 per cent in 2019.
Paying down this pandemic debt can help business owners rebuild their companies. The following tips can help you eliminate your business debt faster, while saving money on costly interest in the process.
Create a debt repayment timeline
Being strategic about your debt will help you pay it off more quickly, says Chris Woods, founder of LifePoint Financial Group, a financial planning company.
“People tend to just throw money at [debt]. Maybe they’ll pay a little bit extra this month or that month,” Mr Woods says. The better approach? Create a detailed repayment plan.
Take a full accounting of what you owe, including interest rates and repayment terms for any business loans or credit card debt you’ve accumulated. Note grace periods and deadlines.
Then, set a reasonable (read: achievable) timeline to pay off your debts and start picking them off one by one. If you’re juggling multiple loans or credit cards, funnel any extra payments to the debt with the highest interest rate, says Zach Reece, owner and chief operating officer of Colony Roofers.
“This is your most expensive debt and you’ll get the highest cost savings from paying this debt down most aggressively,” adds Mr Reece, who is also a certified public accountant.
This [credit cards] is your most expensive debt and you'll get the highest cost savings from paying this debt down most aggressively
Cut expenses, increase revenue
“You can’t pay down debt with money you don’t have,” Mr Reece says.
There are two ways to find more money: Trim your budget or boost your income.
To jumpstart your revenue, re-examine your business model and look for opportunities to reach more customers or expand your sales footprint. You can also take steps to front-load your cash flow. Renegotiate contracts to request payment upfront or offer incentives to customers who can pay six or 12 months in advance.
To cut expenses, scrutinise your budget. Look at things such as advertising, subscriptions, professional memberships and even office space. What can you cancel, pause or downsize?
“Operating leaner will help you buffer downturns and create more cash flow so you have space to pay down that debt,” says Ken Alozie, managing director of Greenwood Capital Advisers.
Refinance, consolidate
Make your debt less expensive by refinancing. Depending on your loan and business history, you may be able to access a better rate, a lower monthly payment or more favourable repayment terms. The same applies for any business credit card debt you accrued, Mr Woods says.
“Look at opportunities to move that debt to another card or lender to have less interest accruing,” Mr Woods says. “This is something everyone should look into, especially if you’ve been on time with your payments.”
Juggling multiple loans? Consolidate them into a single small-business loan, preferably with a lower interest rate and monthly payment. An added bonus: You’ll have just one payment to one lender.
Tap into free business resources
Running a business can be all-consuming. Managing business debt can be, too. Doing both simultaneously? Something will likely give.
Operating leaner will help you buffer downturns and create more cash flow so you have space to pay down that debt
“A lot of [smaller businesses] are in survival mode and can forget that they’re managing a business and need to interact with clients and look for growth opportunities,” Mr Alozie says.
Connect with volunteer organisations that offers free business mentorship. These organisations send emails with tips, important deadlines and updates, freeing you up to focus on your business.
“Don’t feel like you need to do it by yourself. Plug into organisations that will help you stay on top of it,” says Mr Alozie. “You’ll have more leverage, so you’re not out there on your own trying to keep up to date, while also trying to run a business out of the pandemic.”
Killing of Qassem Suleimani
WWE Super ShowDown results
Seth Rollins beat Baron Corbin to retain his WWE Universal title
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Shane McMahon defeated Roman Reigns
Lars Sullivan won by disqualification against Lucha House Party
Randy Orton beats Triple H
Braun Strowman beats Bobby Lashley
Kofi Kingston wins against Dolph Zigggler to retain the WWE World Heavyweight Championship
Mansoor Al Shehail won the 50-man Battle Royal
The Undertaker beat Goldberg
'My Son'
Director: Christian Carion
Starring: James McAvoy, Claire Foy, Tom Cullen, Gary Lewis
Rating: 2/5
David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
PSL FINAL
Multan Sultans v Peshawar Zalmi
8pm, Thursday
Zayed Cricket Stadium, Abu Dhabi
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Killing of Qassem Suleimani
Killing of Qassem Suleimani
Best Academy: Ajax and Benfica
Best Agent: Jorge Mendes
Best Club : Liverpool
Best Coach: Jurgen Klopp (Liverpool)
Best Goalkeeper: Alisson Becker
Best Men’s Player: Cristiano Ronaldo
Best Partnership of the Year Award by SportBusiness: Manchester City and SAP
Best Referee: Stephanie Frappart
Best Revelation Player: Joao Felix (Atletico Madrid and Portugal)
Best Sporting Director: Andrea Berta (Atletico Madrid)
Best Women's Player: Lucy Bronze
Best Young Arab Player: Achraf Hakimi
Kooora – Best Arab Club: Al Hilal (Saudi Arabia)
Kooora – Best Arab Player: Abderrazak Hamdallah (Al-Nassr FC, Saudi Arabia)
Player Career Award: Miralem Pjanic and Ryan Giggs
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Killing of Qassem Suleimani
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
What is a Ponzi scheme?
A fraudulent investment operation where the scammer provides fake reports and generates returns for old investors through money paid by new investors, rather than through ligitimate business activities.
The Voice of Hind Rajab
Starring: Saja Kilani, Clara Khoury, Motaz Malhees
Director: Kaouther Ben Hania
Rating: 4/5
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In The Heights
Directed by: Jon M. Chu
Stars: Anthony Ramos, Lin-Manual Miranda
Rating: ****
Ain Issa camp:
- Established in 2016
- Houses 13,309 people, 2,092 families, 62 per cent children
- Of the adult population, 49 per cent men, 51 per cent women (not including foreigners annexe)
- Most from Deir Ezzor and Raqqa
- 950 foreigners linked to ISIS and their families
- NGO Blumont runs camp management for the UN
- One of the nine official (UN recognised) camps in the region
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Director: Shahad Ameen
Rating: 3/5
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