Use a Business Debt Schedule to Manage Your Loans

Debt is an issue for 70 percent of US-based small businesses, and two-thirds of those businesses are struggling. The main issues these small businesses face are operating expenses, credit availability, and making repayments on debt. 

Loan repayments can impact a small business’s financial health and one way to understand and reduce that issue is through a “debt schedule.” We’ll explore exactly what a small business debt schedule is, then share some advice on how to manage your debt to minimize loan-related problems.

What is a Small Business Debt Schedule?

Simply put, a business debt schedule lists all of the debts that you currently owe. It’s an extremely useful way to understand the details of your loans and will help you service your debt in a more manageable way.

How Can a Business Debt Schedule Help Me?

Ideally, a business debt schedule will assist you with:

  • Understanding when repayments are due.
  • Ensuring you don’t miss a repayment.
  • Reconciling your loan transactions with your bookkeeping.
  • Monitoring your business’s financial health.
  • Identifying your most expensive debts.
  • Analyzing the debts that have the worst terms on them.
  • Prioritizing the debts you need to pay off most quickly.
  • Deciding if you should take on more debt.
  • Renegotiating debt with existing lenders.
  • Refinancing debt through consolidating loans.

What Types of Debt Should I Show on My Business Debt Schedule?

Your business debt schedule should go down to the level of detail you need to make good financial decisions about your loans. For some small business owners, that might be every single payment you owe, including over the short-term. For others, it could be larger, long-term business debts.

Our recommendation is to include all of your medium- and long-term repayment obligations, but to exclude your “accounts payable” and operating expenses. We’ve got a couple of guides to categorizing and optimizing your business expenses.

Examples of the type of loans and debts you might include are:

  • Fixed-term loans agreed with a creditor for repayment over time.
  • Lines of credit that you can draw down on as needed.
  • Small Business Administration (SBA) loans.
  • Consumer credit, like business credit and charge cards.
  • Contracts that commit you to make certain payments.
  • Leasing of property, vehicles, or equipment.
  • Cash or inventory advances from suppliers or others.
  • Invoice factoring and financing.
  • Taxes owed.
  • Other miscellaneous debts and loans.

How Do I Make a Small Business Debt Schedule?

The way you capture the details of your debts depends on what you’re comfortable working with. You could use a spreadsheet, specialized software, an online document, or even pen and paper. Whatever method you choose, here’s how to capture the details.

1. Identify all of the Loans and Debts You Want to Capture

A debt schedule should give you a complete picture of your repayment obligations—this means you need to capture every loan and ongoing financial commitment. Go through your business bank statements, loan agreements, and other areas to make sure you’re not missing anything.

2. For Each Item on the Debt Schedule, Create a Separate Row

You want to compare your debts against each other, so a separate row for each one makes that much easier.

3. For Each Item on the Debt Schedule, Capture Specific Details

For your debt schedule to be helpful, you should capture consistent details about each one. This loan calculator can help you fill in some of the blanks and work out what you owe.

  • Lender or Creditor: The lender that your business owes money to.
  • Origination date and age: The date you originally took out the debt and how long you have had the debt.
  • Original amount of the debt: How much you initially borrowed.
  • Expected repayment duration and due date: How quickly the lender expects you to repay the debt and the final due date when it will be settled in full.
  • Current balance of the debt: How much your business owes, right now.
  • Interest rate: How much interest your business is being charged on the debt.
  • Frequency of repayment: How often the lender expects a repayment from your business.
  • Amount of repayment: How much you have to repay each period.
  • Total amount of repayments per year: An annualized amount of your repayment obligations on that loan over 12 months.
  • Total amount repayable over the remaining life of the loan: How much you still owe before the debt is settled.
  • Total amount of capital repayable: The amount of capital, before interest, that you will repay.
  • Total amount of interest repayable: The amount of interest that you still need to repay.
  • Collateral: Any property or other assets that you have used as a guarantee on the loan.
  • Early repayment and penalties: Whether the loan allows you to repay it early, and any possible penalties.

Whew! That’s quite a lot of information to capture, but getting into this detail now will really help when it comes to comparing your loans. Once you’ve completed your debt schedule, it’s time to use it to help you make some good decisions.

How to Optimize Loans with Your Debt Schedule

Now that you’ve captured all of the important information, let’s explore how you can use it.

Compare Your Loans Against Each Other

Scan down your loans and you’ll be able to identify which ones are the most problematic for your business. This might be based on:

  • Size and frequency of the repayment.
  • Amount of interest you have on the loan.
  • Amount of time you have left to repay.
  • Annualized repayment amount.
  • Whether the loan is secured or not.
  • If you can repay early without penalty.

The key here is to take action to reduce the impact of the debt. There are a couple of ways to do this—renegotiate or refinance.

Renegotiating Your Debt With a Lender

In some cases, it will be worth contacting your lender and exploring options for restructuring your debt. Speak with a lending agent and see what flexibility they have to:

  • Adjust the interest rate on the debt.
  • Change the duration of the loan.
  • Alter the repayment amount or frequency.
  • Make other changes to what you owe.

Lenders will often be open to some renegotiation, especially if there’s a risk you will default or take your business elsewhere.

Refinance and Consolidate Your Small Business Debt

One final option is to refinance one of your small business loans, or consolidate several loans together and refinance all of them. If it’s been a while since you took out the loans, chances are you can find a more competitive deal. 

That could reduce the interest rate you pay, get you better terms, and lower your annualized payments. If you do want to refinance your debt, we can help. Our small business loan comparison tool will help you compare many lenders and find the ones closest to your needs.

Webinar: Writing a Business Plan

If you are applying for financing, a solid roadmap becomes especially important as it is the best way for a lender to get a feel for you and your business.

Disclaimer:  the information provided on this page is meant for general informational purposes only and may not reflect the most current resources and recommendations available. Please consult with your financial, tax, legal, and other relevant advisors when making decisions about your small business.