Digging a Small Business Out of Debt

December 21, 2013 Updated: April 24, 2016

Debt is almost an inevitable part of running a small business, but that doesn’t mean it’s a bad thing. Balancing the right amount of debt and profit is the trick to being able to keep propelling your business forward. Unless you just happen to either 1.) Have unlimited funds to keep reinvesting into your business or 2.) You’re in the lucky small percentage of small businesses that have many times the amount of profit rolling in than expansion costs then taking on a certain amount of debt is expected. 

But when that debt grows to unmanageable portions is when you run into trouble. This is especially true for the smaller small business. What do you do then? First of all, you have to decide if it’s worth fighting for. Yes, admitting defeat and admitting that you’ve failed is heart-wrenching. I mean, you started this business because you had a vision. A dream. Right? 

But you have to realize that business fail on a daily basis and that maybe it’s best to move on to the next thing. Should you decide to do that, you could try to sell the business, but it may be difficult if you’re in tons of debt. It may come to liquidation. That’s a four-letter word, I know. But today, there are a number of helpful options to liquidate a company online. You may also be in luck if you want to try getting a small business loan. Earlier this year was the first time that small business loans increased since 2010. 

But if you still have faith and believe you can recover, there are several things that you should do to have any hope of getting back on track. 

Cutting Costs 

Seems elementary and obvious, but it’s the first thing to look at. Dig in and try to uncover areas where you can cut costs no matter how little it may be. Do you have equipment you no longer use that you could sell? Do you have a couple of offices that you’re paying rent on but not using? Try to rent them out. Do you pay for a robust phone answering system that isn’t really needed at this point? Let it go and find something that fits your budget and gets the job done. There are plenty of options for automated phone systems online that are very affordable. 

Stay in Touch 

This means staying in touch with everyone: customers, creditors and suppliers. As for your customers, give them incentives such as discounts, loyalty rewards or rewards for referring new customers. Anything that increases your profits will help. 

For Creditors, don’t hide. If you explain to them your situation then you just might be able to work out lower interest rates or even completely rework your payment plan. Creditors want you to be able to pay, so if there’s any way they can help they normally will. It’s a lose-lose situation for them and you if they don’t. 

For suppliers, see if they can offer any sort of deferred payment plan. Maybe they can offer a discount on certain products or services. 


Most people speak poorly of debt consolidation loans, but truth is that they can be helpful. You just have to be careful about who you choose to work with and the terms the loan is made on. Sometimes, it can reduce costs by not paying multiple payments and multiple interest rates to different creditors.