After more than a year of navigating lockdowns, mandates and COVID-19 protocols, small-business owners are starting to see a light at the end of the tunnel. But the debt many needed to take on to weather the pandemic still casts an ominous shadow.
In 2020, 79% of small employer firms (up to 499 employees) reported having outstanding debt, up from 71% in 2019, according to a February 2021 report by the Federal Reserve Banks. Of the firms that applied for financing, 58% said they did so to cover operating expenses like rent and payroll, compared with 43% in 2019.
Paying down this pandemic debt can help business owners rebuild their companies. The following tips can help you eliminate your business debt faster while saving money on costly interest in the process.
1. Create a debt repayment timeline. Being strategic about your debt will help you pay it off more quickly, says Chris Woods, founder of LifePoint Financial Group, a financial planning firm in Alexandria, Virginia.
“People tend to just throw money at (debt). Maybe they’ll pay a little bit extra this month or that month,” Woods says. The better approach? Create a detailed repayment plan.