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Finance

5 Smart Ways To Help You Settle Business Loans Quickly!

Summary: Is your business running in losses? Are you losing your investors because of the debt? Do you want to take your small business out of debt?

Rising interest rates and high corporate debt levels are giving sleepless nights to lots of investors and small business owners. It is impossible to predict the future, and with the latest happenings in the world, the period of consistent declines in the GDP of India, it is challenging for small business owners to run their business operations with the guidance of an expert.

Though most entrepreneurs begin their startup by arranging funds through debt funding, equity funding, loans, or other less formal sources like friends & family, the experience of being in debt can be scary and overwhelming. To avoid making drastic mistakes at the initial stage, many entrepreneurs also hire the best business coach in India.

If managed smartly, borrowing funds can help you accomplish your goals; if mismatched, it will affect your financial well-being and cause mental stress, especially to small business owners that are worse affected due to the Covid-19 pandemic.

The Indian government launched many loan schemes to offer relief to MSMEs in subordinated debts, collateral-free loans, and equity infusion through its Fund of Funds (FoF) scheme in 2020. This scheme proposes to purchase up to 15% growth capital in high-credit MSMEs.

You can work with a business coach who can help you manage funds more efficiently. Also, if you have a well-thought financial plan, you can solve the cumbersome process of taking your business out of debt, just like others. Here is how you can chart your way out of debt:

1. Reorganize the Debts 

The first step that will take you closer to managing your debt is to organize all the details of precisely what you owe. Make a list of your debts with EMIs, interest rates, and tenures. This will help you recognize the costliest obligations.

2. Pay Urgent & Costliest Debts First!

After sorting out your debts, pick the costliest one! If not paid on time, expensive debts will extract the highest interest. This can drain your finances. Hence, settle your costliest debts on a priority basis. Take help from the best business coach for strategies that will help you pay your debts.

3. Make Monthly Budget

One of the most vital debt management techniques is planning a monthly budget! Make a list of your income & expenses while deciding on your monthly budget. This will allow you to think about ways to reduce your daily expenditure. Having details of monthly cash flow can help you save money that you can use to clear your debt.

4. Consolidate Loans

Sometimes keeping track of all the loans can be difficult. If you have too many loans, it can be a good idea to consolidate them into one. This will leave you with just one EMI. Business loans, personal loans, and credit cards provide you with this option. It will remove various debts and leave you with just one loan to track. Consult with a business motivational speaker today to understand your finances. 

5. Protect yourself Against Economic Shocks 

The future is uncertain, and it is wise to protect yourself from uncertainties you might be exposed to. For E.g., a loss of a job could lead to delayed EMIs. So, to avoid such situations, create an emergency fund to help you sustain yourself during a bad phase. Ideally, this fund should be 3-6 times more than your current monthly income.

Repaying loans is a moral, legal, and also a financial obligation. With intelligent and effective debt management strategies, you too can get your business out of debt. Learn how to manage your debt with the top-industry leaders from our Problem Solving Courses.

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Business motivation

Gross Domestic Product: All You Need To Know About GDP And Its Dynamic Relationship With Business Cycles

Be honest and ask yourself a question – do you really understand what the abbreviation GDP is all about? If not, let us educate you on this topic. GDP stands for Gross Domestic Product and it is simply defined as the total number of goods and services that are produced by a country. GDP of a country is calculated over very specific timelines such as Quarter or Yearly. It is one of the most common indicators to figure or predict the health of a certain economy.

What Is The Role Of GDP?

GDP holds its importance and rightfully so as it helps the decision-makers and the central banks to assess if the economy is expanding or contracting to take the necessary actions required. GDP also helps the business sector and economists help understand the impact of a fiscal crisis on the economy and be prepared accordingly.

How Is GDP Calculated?

There are basically two approaches with the help of which you can calculate the GDP of an economy. These two approaches are known as the expenditure approach and the income approach.

In the expenditure approach, which is the most commonly used approach, the calculation is based on how much money has been spent by people that participate in the economy. The formula is GDP = C + G + I + NX where C stands for consumption, G stands for total government expenditures, I stands for the sum of a country’s investments, and NX stands for net exports.

Whereas, in the income approach, we use the formula GDP = Total National Income + Sales Taxes + Depreciation + Net Foreign Factor Income. 

What Is The Relationship Between GDP & Business Cycle?

All four phases of economic activities such as economic contraction, trough, expansion, and peak are referred to as business cycles. When an economy experiences some changes in the activities, the results reflect positively or negatively on GDP.

Economic Contraction

It is a phase where the demand for goods and services decreases or/and when the cost of raw materials increases. This results in less work, more layoffs, and an increased rate of unemployment. Even though the GDP, as a result, decreases in this phase, it still stays positive.

Economic Trough

This phase is an extreme and worrisome version of contraction where the unemployment rate is extremely alarming and the economic output experiences an all-time low. This is the time when an economy is either heading towards recession or already is in one with a negative GDP.

Economic Expansion

It is a phase where after going through the worst, the economy begins to grow. An economy is only said to be in an expansion mode when it experiences growth for 2-3 consecutive quarters as growth in just one quarter could be a temporary high, hence can’t be considered. In this phase due to more economic output, the GDP begins to increase.

Economy Peak

As the name suggests, it is a phase where the recovery reaches its peak and the GDP experiences a surge. But economists see this as a saturation point after which upward inflationary pressure and devaluation of the currency happens.

We hope we made this as easy and as fun as possible for you to understand the basics of GDP and how it affects the economy. Make yourself as aware and responsible as possible because our economy relies on participants like you who lay a solid foundation in the form of a healthy economy.