3 things you should do if you’re having trouble paying off a loan
Running a small business can bring many challenges, and one of them is not having enough money to pay for necessary costs. If your business has received a small business loan, you’ve likely already seen the benefits of having additional funds to grow your business. Although your financial burdens have been lifted, you still need to pay back the lender. If you’re having trouble paying off a loan, it is important to consider these three things, so that you can responsibly pay off the loan, and then be able focus on the future of your small business.
1. Be upfront with the lender– Chances are if you’re falling behind on payments, the lender has already contacted you. Don’t avoid their calls and emails; this will not help the situation. Instead, be honest with the lender that you’re having a difficult time paying off the loan, so that they can work on a repayment plan. Consistently communicating with the lender about your progress will be beneficial for both parties involved.
2. Focus on your business’s sales – When in the process of paying off a loan, make sure that you’re doing your best to boost business. Find ways to bring in additional revenue for your business, like working additional hours or offering more products or services. For instance, if you run a restaurant, consider taking a few catering jobs in addition to your in-house service. If you’re unable to make additional sales, consider cutting back on unnecessary expenses. Both of these financial choices will allow you to have more funds to put towards paying off your loan.
3. Discuss next steps– If you’re still having trouble paying back your loan, contact the lender and see if they can change the term length or payment schedule. All lenders have different business loan rates, and when the lender provided you with the loan they tried to match you with a payment schedule and term that fit your business. If this schedule isn’t possible for your business, revising the term length and frequency of payment may help you pay back the lender in a responsible manner without hurting your business’s finances.
Attaining additional working capital should be an exciting time for your small business. If you’re missing loan payments, try these three steps so that you can determine how long it will take to pay off the loan. Then, you’ll be back on schedule in no time!