Lots going on this week. Namely…
The tax filing deadline is Monday, April 15th. For any of our Missoula County business clients who haven’t yet reached out to us, we can still take you on by filing an extension on your behalf and then managing the filing after. But, remember, you still have to pay what you owe Tax Day or else you’ll wrack up penalties and fees.
ALSO note this about April 15th…
Estimated taxes for the first quarter are due.
(Oh, and by the way, if you have finished your taxes with us, please let us know what you thought. We really appreciate it. Make us smile with a review on Google )
This week, I want to talk about business debt… because I hate seeing, when I sit down with a business owner, that they got in over their head with financing. Unfortunately, it’s sometimes too late when I do — and the potential solutions end up being moot.
While I have helped execute some semi-miraculous rescues from business debt situations that seemed impossible for clients in the past, sometimes it’s just too late when the opportunity to help comes along.
So, let’s address that subject today in hopes that I can help you in more ways than one.
3 Debt Elimination Steps for Your Missoula Small Business
“You may encounter many defeats, but you must not be defeated.” – Maya Angelou
Business debt is prevalent in small business life. Recent data shows that 70 percent of small businesses in the US have outstanding debt.
Debt isn’t bad, but there can be real financial concern in the distribution. Many businesses manage smaller debt loads, but a significant portion carry a heavy burden that can impact their financial health.
Around 38 percent owe under 100K but a concerning 62 percent owe over 100K, which can be a heavy burden for smaller companies.
So… what to do about it?
Business debt at exorbitant interest rates is obviously “the wrong kind” of debt. And getting buried under the wrong kind of debt for your business can kill your company’s long-term success and even threaten its viability.
So, what is the “wrong” kind of debt for businesses to hold?
Put these on the list of debts to avoid:
- Business loans with excessively high interest rates, balloon payments, or short repayment terms
- Credit card debt (especially for non-essential expenses)
- Car dealership auto loans and/or leases
- Personal loans with high rates (including “debt aggregation” services)
- Loans from friends or family (without clear terms)
Generally speaking, the wrong kind of debt should be thought of as any debt that is either not necessary – or which could be refinanced on more favorable terms.
To remove bad debt from your business, here’s a clear plan:
1) Organize Your Debts: First, get a complete picture. List every outstanding loan and analyze the interest rates and repayment terms.
2) Prioritize Payoff or Refinance: Can you strategically pay off some high-interest debt without hurting your cash flow for future investments? If certain debts are too expensive, explore refinancing with a lower interest rate.
3) Show Your Strength to Lenders: If your business is profitable or has a clear path to profitability, lenders may be open to refinancing at a better rate. Present your financial health and solid business plan to show you’re a good investment.
Look at it this way: refinancing isn’t a favor to you, it’s a smart business move for them. Lenders make money on loans, and a company with a good track record like yours is a secure investment. Show them your strong financials and they might offer a loan with much better terms.
Business debt is a tool to be used wisely. Let’s make your Missoula County company all the more profitable.
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Looking out for you,
Nancy Kieffer