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Infographic: Time to Tackle Your Small Business Debt

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Roughly 50 percent of small businesses fail within the first five years, largely due to insufficient capital or overwhelming debt, according to the U.S. Small Business Administration. What’s more, nearly one-third of small business owners currently list “reducing debt” as their top priority and many face the challenge of their business capital becoming intermingled with personal finances. So, if your debt is burdening your company, you’re not alone—but it doesn’t have to be that way. If you’re uncomfortable with the levels of debt your business is carrying, start with these small steps to help yield big results. 

It’s Time to Tackle Your Small Business Debt  [dek] With a plan and commitment, your small business can soon be debt free  [intro] Roughly 50 percent of small businesses fail within their first five years, largely due to insufficient capital or too much debt.1 So, if your debt is burdening your business, you’re not alone. Here’s what you need to know:  [subhed] Number of Businesses Carrying Debt2  80% - December 2013 83% - July 2014  76% - December 2014  [subhed] Amount of Debt (in Dollars)2  Almost all small businesses carry debt, including loans, credit cards, mortgages and invoices owed. 33% - 1K to 50K  13% - 51K to 100K  30% - 101K to 500K  9% - 501K to 1M  14% - More than 1M  [subhed] More Than One-in-Four Small Firms Still Can’t Access Adequate Financing3  December 2015: 73% - Yes  27% - No   Nearly One-in-Five Small Businesses Increased Their Lines of Credit in the Second Half of 20153  December 2015: 19% - Increase (in 6 months)  8% - Decrease  73% - No change   [subhed] Has Your Good Debt Turned Bad? Most business owners know it takes money to make money, but if you’re uncomfortable with the levels of debt your business is carrying, here are seven tips.  7 Steps to Help Reduce Debt 1. Examine debt: Determine how much you borrowed for business purposes, whether in your business name or personal name. 2. Prioritize debt: Not all debt is created equal, so pay off the debt with the most serious consequences first. 3. Reduce business expenses: Make cuts in areas that won’t hurt your overall business. 4. Negotiate with creditors: Work out a plan to reduce your debt more quickly. 5. Consolidate loans: Consider combining your business loans into one lump payment to help lower your costs and interest rates. 6. Boost income: Try expanding your geographic market area, bundling your products or offering frequent buyer discounts to help increase revenue. 7. Talk to your accountant: Discuss the right level of debt and structure of debt for your business.  1 “How to Deal with Small Business Debt,” Debt.org 2 “2014 Year-End Economic Report,” 2015, National Small Business Association 3 “2015 Year-End Economic Report,” 2016, National Small Business Association

Managing your business isn’t easy, and SunTrust is here to help so that business ownership is rewarding. For more information on reducing debt, visit the SunTrust Resource Center.

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This content does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.


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