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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.
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Failure
While facing financial risk is part and parcel of a business, being stuck in massive debt is never a good position to be in. Particularly when there are different strategies to assist you to close your loan quickly. Here are five strategies to repay your bank loan for business quickly.
1. Bring down your unnecessary expenditures
You can begin with figuring out the areas that pushed you into debt first. Once identified, make such areas efficient or remove them, if possible. For example, if you have been spending a lot on your office space, you can consider permitting a few of your staff to work from home. Or if your advertising expenditures are burdening your finances, you can choose cheaper marketing platforms or strategies. The idea here is to simply reduce your unnecessary expenses until you pay off your whole outstanding debt.
2. Form a better budget
The next proven strategy to close your debt faster is to design a budget for each business task and stick with it. You can undertake the method of zero-based budgeting of allocating your monthly income towards expenses, savings, and debt repayments. As per this method, for every new period, you start from a zero-base where you analyse the needs and costs for every business function. Here, the budget of any previous period is not your benchmark. Instead, you must be able to justify all your expenditures towards the end of every accounting period.
3. Generate higher revenue
Generating higher revenue in your business is one of the best ways to close your business loan faster. For better returns, you can consider raising the prices of your goods or services, upsell to consumers, or optimise the inventory to concentrate on what is selling well. Also, you may identify and sell your goods to newer markets and transform your marketing practices to earn better outcomes.
4. Go for debt consolidation
Debt consolidation is beneficial if you hold multiple loans. It is because this consolidates all your loans into one for improved debt management. Debt consolidation might also allow you to bag a lower rate of interest, which lowers your Equated Monthly Instalments (EMIs). Moreover, this option also eliminates the need to juggle multiple payment due dates as you need to track only one loan every month.
5. Negotiate with the lenders
In case you think your debt-repayment structure is not well designed, you can again negotiate the terms and conditions with your lender. The lender might re-adjust your loan terms by reducing the rate of interest, especially if your past repayment record is good.
Ending note
One of the prudent moves that can spare you from witnessing a debt trap is choosing the right lender. Thus, apply for a business loan only after you have compared amongst different lenders and zeroed in on the one offering higher benefits at minimal cost. However, if you already taken the bait, you can get yourself out by following the above-mentioned strategies.
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