Best Way - The Best Way to Eliminate Business Debt

Businesses go into debt for several reasons, including expansion, poor management and sometimes unexpected expenses, according to Financial Web. Some managers make the mistake of waiting to deal with their debt. Businesses that deal with their debt sooner rather than later make out better in the long run. Businesses that don't manage their debt will face intense pressure from their creditors and may even face lawsuits down the road.

Commercial Debt Counseling

1. Commercial debt counseling is similar to consumer debt counseling, but commercial debt counseling works with businesses instead of individuals. Commercial debt counseling helps businesses eliminate their debt and avoid bankruptcy by working to create a repayment plan with their creditors, according to CommercialDebtCounseling.com. Two commercial debt counseling websites are DebtReliefUSA.org and DebtLeap.com.

Business Debt Consolidation Loans

2. Business debt consolidation loans are used to pay off multiple debts. Debt consolidation loans are easier for businesses because owners only need to worry about paying a single monthly payment instead of multiple monthly payments. Business debt consolidation loans also allow business owners to deal with a single creditor instead of multiple creditors.
   
   The two types of business debt consolidation loans are unsecured and secured. Unsecured debt consolidation loans are not backed with collateral such as a house, while secured debt consolidations loans are. Secured debt consolidation loans are easier to get because the borrower has collateral if he cannot pay the loan.

Take Money Out of Personal or Business Reserves

3. Credit.com explains that owners of businesses who are in debt can take money out of business reserve funds or money out of their own pocket to pay off business debt. Taking money out of your own pocket may not be an option if you own a large business, but it's certainly a viable option for small business owners.

Communicate With Your Creditors

4. The most important thing for small business owners in debt is to maintain an open line of communication with their creditors. Small business owners who don't use commercial debt counselors can speak to their creditors directly about developing a repayment plan for their business debts. Creditors would rather have you contact them to discuss a repayment plan than have you ignore their phone calls regarding your debts.

Cut Your Expenses

5. Business owners who are in debt might consider cutting their expenses by cutting back on employees. Business owners can use the money they save to help pay off their debts. Tell your creditors how you plan to cut your expenses. If your creditors know you're cutting back, they'll be more willing to work with you to develop a repayment plan.