Starting, running and growing a business can be expensive, and it’s not uncommon for businesses to carry some debt through their journey. But sometimes debt can build and start to feel overwhelming, having a negative impact on the business, the business owners.

The good news is there is a lot of help and support available for businesses struggling with debt management. Below you’ll find some helpful information if you’re worried about debt within your business.

If you’d like to speak to someone about your individual circumstances you can make an appointment to speak to a Business Support Adviser who can provide free, impartial advice and signpost you in to the right support for your business.

1. Business Debtline

Run by the Money Advice Service, Business Debtline is a charity that provides free debt advice to the self employed and SMEs. Over 50% of the businesses that receive support from Business Debtline continue to trade.

As well as offering a range of debt advice fact sheets on topics including:

• Business rates
• Limited companies
• Hire purchase debt
• Full and final settlement offers
• Managing business finances…

the Business Debtline also has a team of advisers with an expert knowledge of debt advice. You can speak to advisers over the phone or online via email or webchat.

An online sample letter library also allows businesses to write to creditors using prepopulated letters that contain all the relevant information. Each sample letter explains how and when to use it.

To find out more about the Business Debtline and the support it offers, visit www.businessdebtline.org.

Four ways to deal with your debts

2. Increase your business income
 

There are various different ways to increase your business income; from funding and grants and enterprise agencies to reviewing your pricing and increasing sales.

It’s also helpful to review if customers are paying you on time. Late payments are a huge issue for SMEs. Remember, if your business is suffering because of late payments, you can get free help and support from the Small Business Commissioner - an independent public body set up by Government under the Enterprise Act 2016 to tackle late payment and unfavourable payment practices in the private sector.

Find out more on the Business Debtline website.

• Compile a business budget

Creating a budget is an essential first step in managing business debt. It helps you identify how much money is coming into the business, how much is going out, and where you can make savings. It also gives you starting point for what available income you have to pay off your debts.

Find out more about compiling a business budget and access various budget sheets on the Business Debtline website.

• Deal with your priority debts

Priority debts are considered to be those that will have the most impact on your business, and you personally, if creditors begin action. For example, this may be rent payments for your business premises; utility payments like gas, electric and water; or where the creditor can remove belongings from the business or ask a magistrates’ court to send you to prison.

As long as you act quickly, it’s possible to manage priority debts early and limit any further negative impact on the business.

Find out more about managing priority debts on the Business Debtline website.

• Deal with your non-priority debts.

Non-priority debts are characterised as debts where the creditor cannot impose additional powers to collect payment. For that reason you have more time to agree a solution.

Debt management plans are an effective way to reach an agreement with creditors and begin making small repayments. You can find more information about debt management plans below.

Read more about the various ways you can manage non-priority debts on the Business Debtline website.

3. Debt management plans

An agreement between a business and its creditors to pay off any outstanding debts, a Debt Management Plan is a good option for businesses that:

• Can only afford to pay creditors a small amount each month
• Have debt problems but can make repayments in a few months

Debt management plans can be drawn up and agreed directly with creditors, or through a licensed debt management company. If you decide to use the services of a debt management company, payments are made to the debt management company who then pay creditors.

It’s important to remember that Debt Management Companies will charge a fee for their services. Make sure you understand the costs of your plan and how you pay for it before signing any contracts.

Find out more about Debt Management Plans on GOV.UK.