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What Should You Do If You Can't Pay Back a Business Loan on Time? We've said many times that unexpected costs are inevitable. These costs can sometimes make it impossible for you to pay off your business loan on time. There are, luckily, several things you can try before going to extremes: 1. Call your financial institution Immediately If you're not sure you'll be able to pay your next monthly bill, don't wait until it's due and hope for the best. Instead, call your business lender and tell them what's going on. Remember that defaulting hurts both sides. Your business lender doesn't want you to stop paying on loan, so they plan to keep this from happening. They might be able to extend your loan or lower your monthly payment. 2. Make changes on the inside There may be things you can do to make it easier to pay your bills every month. For example, if your marketing hasn't brought in as much money as you hoped, you can cut back on it. You can also use strategies to bring in more cash each month for your business. Some examples are changing the terms of an invoice or following up with clients who tend to pay late. Also, ask for a deposit upfront if you want new clients. Another possible solution is to use tools, like automated email systems, that help you make more sales. 3. Get a second loan When a business borrows money to pay off another loan, it needs to be extra careful. First, you should ensure you've done everything possible to reduce your monthly payments (i.e., the solutions recommended in the previous section). Then, tell the possible lender what the loan will be used for. If the lender has been in your shoes before, they will give you a loan that lets you pay off the first loan and fix the cash flow problem that got you into this mess in the first place. The business lender might also advise on how the money should be used. For example, you should spread the money across all your debts instead of just paying off the first loan. 4. Get other people to help you reach your money goals. Talk to your vendors, suppliers, and credit card companies for better terms or lower rates. Shortly, you can lower your monthly payment or get a discount on inventory. Also, teach your staff how to increase sales and be more careful with business resources. Most likely, your employees will have ideas for how you can save money and get more done with your time.