In the Philippines, smaller companies are getting a bigger share of an economic landscape once exclusively dominated by massive domestic conglomerates. However, despite countless recent successes, many SMEs (small- and medium-sized enterprises) still face an uphill struggle to achieve basic financial fitness, often because of lapses in managing business debts.
Business debts are a fact of life for entrepreneurs, especially ones who are focused on growth. With the Philippines’ economic outlook more positive than ever, it’s become easier for ambitious entrepreneurs to get new loans for businesses.
That being said, regardless of where you are on your business journey, knowing how to manage business debts effectively will ensure that your startup or SME thrives and remains financially resilient. Here are five proven debt management strategies that will keep you in business indefinitely:
Choose Reputable Small Business Loan Providers
If you have an SME, it’s important to borrow from reputable institutions that understand small businesses. Lenders that primarily cater to large organizations and microenterprises are usually not able to offer terms or interest rates that make sense for SMEs, and taking loans from these creditors can expose your business to unnecessary risks.
When they need a fast and secure business loan, Philippines-based SMEs now often turn to products like the Maya Flexi Loan from Maya Business. The Maya Flexi Loan lets you unlock up to PHP 2 million that could be divided into separate, easy-to-manage loans—with no collateral needed. With its low borrower fees and instant transfers to Maya Business Deposit accounts, Maya Flexi Loan offers fewer risks than many traditional funding sources.
Review and Reprioritize Existing Loans
If you’ve taken out business banking loans from different lenders, it’s important to have a coherent strategy for paying them off that won’t impact your business’s operations. While there are a lot of ways to pay off your loans, many borrowers choose to go with either a “snowball strategy” where the smallest debts are paid off first or an “avalanche strategy” where minimum payments are paid on all debts and leftover funds go towards paying the largest loan.
In either case, once you’ve settled on a strategy, make sure to have your finance team classify your loan payments as fixed costs to be paid before other business expenses. You can also consider setting up automatic payments to further reduce the risk of penalties from delayed payments.
Review Your Budget
More savings means more cash for critical loan payments. To save cash without compromising your production, consider renegotiating contracts with suppliers or finding cost-effective alternatives to existing solutions. To further bring down your overheads, you can also upgrade fixtures and equipment to energy-efficient models and rethink your marketing to focus on low-cost, high-impact campaigns.
Optimize Your Payment Processes
If your business only accepts cash, it’s missing out on opportunities to increase cash flow and to pay off its debts early. Maya Checkout and Maya Terminal allow you to accept a full range of payment types, including credit and debit cards, QR Ph codes, and popular digital wallets. These payment solutions will not only help increase your SME’s cash flow but they will also reduce the cost to facilitate each sale, softening the burden of impending debt payments.
Build Your Cash Reserves with SME Banking Products
Even as you take on and pay off critical debts, you should also be working towards building your business’s cash reserves. A sufficiently robust cash reserve will give your SME stability and allow you to seize opportunities and weather downturns with confidence. Importantly, if your business has enough cash, it won’t need to take on loans to expand or cover emergencies.
SME-oriented banking products like the Maya Business Deposit can be invaluable for building and maintaining your cash reserves. With its 2.5% per annum interest rate, the Maya Business Deposit product is uniquely suited to help your SME grow its financial safety net. By putting your business’s earnings in a Maya Business Deposit account, you’ll enhance your business’s stability with minimum effort.
Give Your Small Business More Options with Maya Flexi Loan
The no-collateral Maya Flexi Loan product gives you up to PHP 2 million in fresh funding to help your business achieve stability faster than you thought possible. With fast approvals and instant deposits into your Maya Business Deposit account, Maya Flexi Loan gives your business the resilience it needs to meet any challenge. Create a Maya Business Manager account today to receive an exclusive business banking loan offer from Maya.
Creating a Maya Business Manager account gives you fresh growth opportunities like Maya 1-2-3 Grow. The Maya 1-2-3 Grow Bundle entitles you to a 1% MDR discount for all QR Ph transactions for 3 months after onboarding. This exclusive rate saves you PHP 14,600 in transaction fees for every PHP 1 million in QR Ph sales, giving you room to pay off your loans without compromising your operating budget. After activating this bundle, you can also assign a Maya Business Deposit account as your settlement account. You’ll earn a 2.5% per annum interest on your deposit account, which translates to PHP 25,000 in interest per year on a PHP 1 million deposit. Signing up for Maya 1-2-3 Grow also automatically qualifies you for a Maya Flexi Loan offer of up to PHP 2 million in just 3 months. Create your Maya Business Manager account for SME-focused financing and to take advantage of exclusive business growth bundles like Maya 1-2-3 Grow.
