Whether you’re a new, up-and-coming business or have been around the block a few times, having business debt is nothing unusual. Over 36 percent of small business owners in the U.S. feel uncomfortable with the amount of debt they’re trying to manage.
But just because business debt is common, doesn’t mean you have to feel overwhelmed by repaying it, or worse, like you’re drowning and need help knowing where to start. What you need is a strategy to manage your small business loan.
This blog outlines a few must-know tips for all small business owners.
1. Establish a Loan Repayment Plan

As a business owner, you must know every nitty-gritty detail about your small business loan. This includes how long it will take to pay the loan, what you can afford to repay each month, the penalties incurred for late payments, etc. You also need to know when your loan will be paid in full and what you’ll end up paying in fees and interest over this time.
It’s also worth doing some research on how much faster you can repay a loan by paying a little more than the minimum requirement each month. What if you put in an extra few hundred dollars, for example?
With this in mind, sit down with an expert financial team and draw up a detailed repayment plan. The final repayment date of the loan might change, but it’s essential to keep track of it, so you stay caught up on repayments.
After you make each payment, you must know where you stand in getting closer to the end goal — paying it off.
2. Stick to a Debt-Reduction Strategy
Depending on how much you owe, you must choose the right strategy to suit your business when repaying a loan. Some of the most common (and effective) strategies for repaying debt include:
- The Percentage strategy — you dedicate a percentage of your business profit each month to paying off your loan
- The Spartan strategy — you formulate an essential list and outline precisely what you can spend money on, a cent more once you pay off the loan.
3. Rework Your Business Budget
Once you have established a loan repayment plan, consider your overall business budget. You will need to make a few amendments.
Remember that efficiently paying off your debt means organizing and prioritizing your business income. That means determining how much cash you have each month to pay off your debt.
Small business loans don’t just pay themselves or go away over time — you must rework your business budget to accommodate paying it off specifically. You should do this monthly, as cash flow can fluctuate within a business on a monthly basis.
4. Make Partial Payments, Where Possible
Not all loan terms and conditions allow for this, but if yours does, you should use it fully. Make frequent partial repayments, i.e., a half-payment every two weeks. In short, this means you’re making 13 payments in 12 months.
Most small business loan repayment terms are around five years or so. You’ll be able to pay off your loan a little faster (up to 6 months in advance) and save on the interest you pay over the course of the loan.
Thinking of Taking Out a Small Business Loan?
The bottom line is that the injection of cash flow that a small business loan offers can do absolute wonders for your business. But only if you know how to properly manage your debt and repay the loan so that your business grows from strength to strength.
Finding the right lender is also paramount to managing your debt. With Key Capital, you have the best financial experts on your side.