US dollar how to pay off business debt

15 Practical Ways To Pay Off Business Debts

Last updated on September 16th, 2022 at 08:07 pm


Things are not always rosy as you think for all business owners, some of them struggle with how to pay off debts. I got to know this through a lady who shared the challenges her husband is facing.

“My husband has been working for the past seven years, he earns well, but he uses the money to settle debts every month. After that, we’ll start all over again. This has been impeding our progress, working and earning, but nothing to show for it.”

Inability to pay off debts in a business venture could cause psychological trauma for the owner, if you must find a way to complement your existing source of income, find one of our useful guides at:

Should you close shop because of debt

If you found yourself in this situation closing shop isn’t an option. The best thing is to re-examine your day-to-day expenses and start attacking your debts. You shouldn’t let your debts stop you from building and expanding that business, start clearing it off now.


How can you get this done?

Here are the 15 most effective ways to settle your debt as a business owner

  • Reassess your debt
  • Re-examine expenses
  • Consider relief fund
  • Restructure budget
  • Utilize tools and resources
  • Negotiate loan repayment term
  • Monetize your skill
  • Negotiate for lower rates
  • Limit credit
  • Lowering interest rates
  • Hardship program enrollment
  • Reduce your spending
  • Work on how to increase revenue
  • Reduce advertisement spending
  • Explore other revenue-generating business

Re-assess your debt

We understand that covid-19 caught millions of people and businesses unaware. No one planned for the pandemic. Only businesses that were almost online rake in a sizeable revenue through online sales.

For physical shop owners, the pandemic bit harder leading to debt. Before paying off your debt, it’s important that you reassess why you incurred it, take stock of your financial situation.

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 How to reassess your debt:

  • Write out all your debt to get a clear picture of how to attack it
  • Calculate your profit
  • Map out a plan of your capacity to settle it
  • And finally ask yourself: will the income be enough to pay off the debt?

If you took loans from a financial institution, it’s very important to first settle the ones with a high rates because the longer you, the more you pay as interest.

Reexamine expenses

Which expenditure got you into debt? What went wrong? If you are able to identify the loopholes, it’s advisable to take practical steps to eliminate unnecessary ones

For example, if footing the bills of your workers for an international retreat got you into debt, find a way of localizing the next time.

If advertising on major platforms is hitting deep into your finances, re-examine and stick with the most effective marketing platform.

Consider relief fund

During the pandemic, the Nigerian government paid relief funds to teachers in private schools in Nigeria. For instance, founders of private schools were relieved of the financial burden they could have faced.

One of the ways to settle the business debt in time of a pandemic is to search and apply for relief funds.

Restructure budget

Budgeting is key to any business. How much goes out, how much comes in, and how much goes to purchase, staff salary should be evaluated when trying to fix the financial crisis in a business.

If your expenses are more than profit, that is a deficit, and it can pile up over time and lead to huge debit if not checked immediately.

We’re in the post-pandemic era. The way business is done has been redefined by the pandemic. If the monthly salary paid out to staff isn’t bearable again, opt for freelancers to avoid higher salaries and benefits.

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Utilize tech tools

Technology has not only simplified the way task is being done, it’s also a means of saving cost in the long run.

From accounting to budgeting, from staff daily check-in register machine to Closed-circuit television (CCTV) for security purposes, technology has made it possible to automate so many things that would have ordinarily require several men to implement.

Go digital, for instance, an auditing firm could buy accounting software that can effectively carry out within hours what five or more men would be unable to execute in days.

Negotiate with lenders and creditors

In addition to reducing expenses and attempting to increase revenue, find ways to make your debt cheaper. You could try the following:

Negotiate loan repayment term

More time to repay your loan gives room to channel some monies to other things. It means less pressure on your finances.

Monetize your skill

Leveraging your skills is another source of income. Monetize your skill, use earnings to complement your existing business by paying off your debts.

One of the ways to monetise your skill is by offering services to a group of people or an individual who is ready to pay for your time and effort.

Negotiate for lower rates

Another way to pay off business debts is by negotiating the terms of the loan, the interest rate. To win this negotiation you must have been consistent in your monthly payments.

Limit credit

An Igbo cosmetic businessman from the Eastern part of Nigeria once said that he doesn’t take products on credit. I thought taking products on credit most especially if you have a supplier who trust you was a great way to even make profit since you have the opportunity to return cost after-sales. I was totally wrong.

When I asked him why he rejected such an offer, he said he couldn’t bear the burden of deliberately plunging himself into debt.

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Buy what your budget can accommodate, keep the profit, and reinvest it as it comes in. That way, you can avoid debt while you expand and grow your business.

Hardship program enrollment

To qualify for hardship programme enrollment, you must be able to show the creditors a good score of financial statements and tax returns from your business.

Reduce your spending

According to, “household debt in the United States hit $14.6 trillion for the first quarter of 2021.” Household spending could spill over to your business if proper management isn’t in place.

While you’re trying your best to avoid or pay off your business debts, you must also ensure moderation in your spending on households.

Work on how to increase revenue

What are you selling? And is your business set up in the right place and location? For instance, setting up a beer parlor joint in Northern Nigeria is definitely going to be counterproductive to your revenue.

Apart from being sanctioned by the Islamic police called Hisbah, your goods could be destroyed for violating Sharia law.

Apart from that, how competitive is your price compared to your competitors? If your competitor is selling the same brand of a wristwatch, same quality for $1,500 and you’re selling yours for $1,900 you are most not likely to sell more if your shop is on the same location or eCommerce platform.

Again, focus more on what is selling. Some products are seasonal, some are not. You have to put this into consideration when trying to figure out how to settle your business debts.


The first step in writing off your business debt is to know exactly what you owe

Avoid incurring more debts at all costs even as you work on how to reduce your expenses.

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