How to Fix a Business Around After an SBA Loan Default

Small Business Administration (SBA) loan programs can be extremely useful resources for kickstarting small businesses. However, if you’re experiencing tumultuous business in 2019, you may find that coming up with the funds for your SBA loan payment is proving tricky.

Start testing, but start small

If you’re defaulting on your SBA loan payment, something needs to change. The best way to implement change is through manageable human-scale alterations. Incremental changes allow you to recognize, monitor and harness feedback in a controlled way.

This is the clincher in business. To understand whether a change is successful, we need to measure the outcomes of that change and use those measurables to build actionable steps forward based upon the results.

Imagine you have a bar and you want to increase profits. You offer 2-for-1 margaritas on Wednesday. For a whole month, the bar is packed and then starts to tail off the next month. You decide that people have gone off margaritas, so you opt to serve mojitos instead. Nobody comes. You change to a different cocktail, nobody comes. You research the best cocktails, drop the price and offer pitchers on the 2-for-1 deal. Still, nobody comes.

If you’d asked for customer feedback over that monthly period, you would have known that there was a Mexican restaurant doing 2-for-1 tacos and that people enjoyed drinking margaritas after their meal. Once the 2-for-1 deal ended, those people didn’t want to come over to the side of town in which your bar is located.

Collating and analyzing feedback is integral in making meaningful change that enhances your business and drives higher profits, which help cover your SBA loan payments. Otherwise, it’s simply a guessing game of what’s working.

Eric Ries, author of , suggests using the ” learn, test, feedback” cycle for implementing changes. Start by learning. If you want to know how to improve your business, start by looking at the trends and interests of people within your catchment area, both off and online. This will give you ideas for change. 

Don’t get stuck in “analysis paralysis.” Understand when your idea is ‘good enough’ to go and get it out.

The second step is to test the idea. It is important to understand that change needs to be manageable otherwise it can quickly get out of control ⁠– especially if it goes wrong. If you implement heavy-duty changes, you’ll get heavy-duty results. Congratulations are in order if this works out, but also it’s catastrophic if it doesn’t. 


Editor’s note: Looking for a business loan? Fill out the below questionnaire to be connected with vendors that can help. 



Imagine you own a restaurant and decide that serving fresh pizza cooked in a clay oven is the best way to enhance your profits. You plow all your capital into building a pizza oven that takes up half your outdoor seating area. If this doesn’t work out, you’ve not only lost all your capital, you’re now saddled with a useless pizza oven and half as much outdoor space, which, in turn, limits your summer sales.

Alternatively, smaller-scale changes with correct feedback metrics help you determine the direction your improvements should take. For example, you would first incorporate a pizza night with a new launch discount and build a robust set of feedback metrics to test it. You monitor whether more customers come in, how much longer they stay and how much more they spend (and on what). Perhaps you’ll notice that people tend to order wine more often when they eat pizza or add an extra side. If a customer orders pizza, ask for feedback, not just on the dish, but also on why they bought it.

You may find that your customers were thrilled that pizza was now being offered and that’s why they dropped in. In fact, they were so happy about it that they ordered an extra glass of wine for the authentic Italian feel. Good for you. Try adding spaghetti bolognese on the menu or offering 2 for 1 on Italian wines. [Are you looking for a ? Check out our reviews and best picks of your options.]

However, perhaps the real motivator was price. Where better to take the whole family for a great value meal? It’s such a bargain that mom and dad relax mid-week with a bottle of red wine and maybe even splash out on a  side of garlic bread. If that’s the case, maybe you offer pizza night twice a week or as an early-bird deal.

Use your feedback system to guide you toward your next moves. Without it, you’re flying blind. Motives and behaviors can be tricky, but using feedback systems allow you to see working patterns that can be replicated and harmful patterns to avoid. That way you can start the cycle again, learning about the positive results from your feedback and developing systems to scale them up.

Perhaps a pivot?

Pivoting in business refers to the concept of switching strategies as a way to correct your course as a company. While small, steady solutions are a good step forward, you may find that nothing you try works. This may be because a larger upheaval is needed to readdress the underlying structural presumptions of your business.

While pivoting may seem like a drastic course of action resulting in big time/money costs, often we find that only one substantial element needs to be changed. The difference between incremental changes and a pivot, however, is that that pivot is most often tied to key aspects of the company’s personality and operation. Examples of pivots include:

  1. Delivery platform
  2. Revenue model 
  3. Key target audience
  4. Main product functionality to suit a different need in the same audience
  5. A supporting product may become the main product or vice versa
  6. Growth model
  7. Change in technology
  8. Sales channels

Take YouTube. While it’s difficult to picture YouTube as any other company, it was originally intended to be a dating app. However, once it recognized its potential as a more general video hosting platform, it pivoted its main product’s functionality to suit a different need in the target audience.

Shopify is another big company that pivoted. The founders had an idea to start an online snowboarding brand but couldn’t find any e-commerce storefronts they liked. They decided to build their own. They found a better response to the need for the shopfront than the snow gear, leading them to pivot and make their secondary project their main product.

Curad is another example. While Band Aid held the market for adhesive bandages, Curad decided they needed to pivot to compete with the generic giant. They designed adhesive bandages with cartoon sticker on them. By pivoting their target audience, they became the largest distributor of children’s adhesive bandages.

But how do you know if your company needs to pivot?

Whatever the reason, when you recognize that you a stagnating or morphing organically toward an alternate outcome than the one originally planned, it’s time to actively pivot. Do it quickly, and get yourself measurable goals that allow you to monitor your progress. 

Just like small changes, pivots work best when spun through the ‘learn, test, feedback’ cycle. Channel your previous hard work into making the pivot easier, using the resources and efforts you’ve pooled together before. Listen to customer feedback as well as your own metrics, as outside opinions can often highlight points you may not have considered ⁠– maybe even the way to pivot.

Get personal

When we consider all the world’s inventions over time, it’s pretty clear that everything designed for everyone to use all of the time has already been commandeered by household brand names. Think about things like Tylenol or Kleenex – the products that aren’t niche are far harder to compete with as people already know their favorite brands or are indiscriminate about which ones they buy because it doesn’t matter. Do people really have that much of a preference on dish sponges or milk? No, generally people just pick the brand they’ve always used or the cheapest version. As business mogul Seth Godin points out, “Not everyone is your customer.”

To combat people’s decision-making apathy when choosing products, you need to be remarkable (or a purple cow, as Seth says). To stand out in an over-saturated or historically commandeered market is difficult. You can try to go head-to-head with Kleenex if you like, but they likely have a mountain of more resources than you to get their brand to the top of the pile.

Instead, consider the following: 

It is easier to be remarkable in a niche because the crowds are smaller and you can tailor an idea to specifically suit a certain sector of people. Often niche products can also charge more, meaning you need to make and sell fewer.

It is even more simple to target a niche that you know. Research into a subculture or trend can seriously boost your chances of infiltrating that category, as you’ll understand their specific wants, needs, and preferences for delivery, cost, timing, aesthetics, etc.

It is the most simple to target a niche that youknow off by heart. When we’re in the inner circle, we understand not only the problems and lack but also how they need to be solved to suit the target audiences’ desires and preferences.

Take the app TeuxDeux created by entrepreneur and graphic designer Tina Eisenburg-Roth and her team. Though their main focus is not on organizational improvement for companies, while trying to master their projects, they found that no to-do list tool met their specific requirements as a creative team. Their response was to design and make a tailored app to specifically manage their situation. This app is now a hugely successful paid-for product that took little effort to design and build. Why? Because they knew the exact issue and how to address it because they’d lived it. 

In this sense, your small business should target a niche you know well and understand on a personal level. That way you’re on first-name terms with the niggles and gripes and can find suitable solutions to do the trick.

In this respect, if you’re currently offering a wide range of versatile, one-size-fits-all products for everyone and nobody is buying them, that’s because something for everyone is something for no one. 

Get specific, narrow down your direction, and hone in. By stacking your efforts on something you know about care about, you focus toward finding real-world solutions that you know work because they help you. These practical, effective solutions are far more appealing and easier to market. Not only that, customers with similar tribulations will find your product better, use it more often, and pay a higher price if it specifically targets their exact needs.

Go greener

Environmental concern plagues the world at present, and whether you’re an eco-warrior or not, the green paintbrush is coming your way.

Rather than fighting the oncoming tidal wave of environmental initiatives, it’s best for your business to get ahead of the curve. While eco-friendly measures may seem hippie to some, you’ll find they save you a considerable chunk of money, money you can put toward paying off your SBA loan.

Try some of these steps to cut back on costs

  1. Start by getting an energy audit and making appropriate changes
  2. Change to a green energy supplier
  3. Change appliances for low-energy usage appliances
  4. Make use of natural light and passive heating/cooling 
  5. Go paperless
  6. Choose local suppliers to cut down on delivery costs
  7. Low emissions company transport
  8. Replacing office furniture? Use Freecycle, Craigslist, and other second-hand sources
  9. Add water filters rather than giving away plastic bottles
  10. Change merchandising
  11. Consider having employees work remotely
  12. Use Skype and other video conference software instead of traveling

The green revolution not only helps ease your carbon footprint, but it will also seriously cut back your outgoings. When we make a concerted effort to reduce waste and consumption, we find our outgoings tend to shrivel.

Equally, you’ll often find various grants and funding available for companies actively demonstrating green initiatives. This may be worth research to see if you can boost your income through green measures.

Instill a sense of ownership

Ownership comes when we feel responsible for the success of a venture, from which we can later reap the rewards. As business owners, we know that we’ll put our blood, sweat and tears into making our small business work because it’s our baby – we experience overwhelming ownership.

Guy Singh-Watson is the founder of the UK’s top organic farm delivery service, Riverford. Riverford has been 78% employee-owned since mid-July 2018. In Guy’s eyes, the full diversity of human potential is often wasted by the binary confinements of conventional ownership, with cynical management neglecting extra attributes that employees may bring to the table.

In fact, since being employee-owned, Guy has noted that sales, cost controls, and margins have never been better while his staff exudes confidence, pride, engagement and dignity. Not only that, once former employees began to take ownership in the project, the business grew in unexpected ways – such as the development of the app. As staff takes ownership in the business, personal concern for its outcome leads people to creatively harness all their skills to produce innovative solutions. This furthers the business in ways not previously considered.

Employee ownership is just one way of driving profits through more effective staff engagement. Consider real estate agents, telesales operatives and others in the selling fields. The financial incentives from commission not only makes these individuals work harder at selling, but it encourages them to think laterally in their solutions and take pride in their work as the results rely on their own hard work.

For ownership-based or commission setups to work, there are some poignant aspects to consider. 

First, have you hired the right people? Some people simply won’t perform better no matter how much commission you offer as they’re happy to earn their basic salary and work at a steady pace. If you consider real estate, for example, many agents have a 90/10 salary ratio, where 90% comes from commission. While this may seem a little extreme, the real estate industry weeds out poor salespeople by removing the comfort of standard compensation to fall back on. In this sense, only people confident enough in their capacity to do the job, apply for the job. These people understand the personal responsibility needed to drive results. In fact, you’ll often find that those who rebuke the concept of employee-ownership, simply don’t want to take the responsibility that goes with it.

Secondly, consider your incentivization scheme. If you offer your employees a 10% commission for sales more than $1,000, and 20% commission for sales more than $2,000, you’ll find a lot of $1,000 sales. Why? Because it takes a lot more responsibility and strategic effort to close $2000 of deals than a $1,000. As globally recognized entrepreneurial systems expert, Tim Ferriss, points out when faced with a strategic challenge such as this, most people will opt for the lesser effort or the result they know they can achieve. This is because the fear of failing makes the extra effort seem like a waste of time.

So how do you encourage your staff to take ownership of the problem, find creative solutions, and sell the higher priced products? Retroactive incentivization. If your staff reach $1,000, give them 10% on all sales. If they reach $2,000, give them 20% on all sales – even the sales less than $1,000. 

While giving away profits may seem counterintuitive if you’re looking to settle your SBA loan, you’ll find far more responsive staff when you’re generous toward their effort and recognizing of their work. By providing a fair reward yet enforcing a level of responsibility, you coax your employees to take ownership, improving both the number of their sales and the quality of their ideas and efforts.


While SBA loan programs are a great idea, they can often leave you feeling like a failure if you can’t make the repayments on time. Not only that, all the stress and worry can leak into your business, affecting the day to day decisions you make. Luckily, through objective analysis and feedback, we can try to straighten the sinking ship and put your business on to a path to success.

Ask yourself what’s been working and what hasn’t. If you’re unsure, it’s time to learn, test and measure. If you know what’s working, learn, test and measure actions based on that.

If you’re sure nothing’s working, have you considered a pivot? Pivoting can certainly help you to hone in on the most effective arms of your business and its potential. You may find that something as simple as marketing to a new target audience or changing your technology could do the trick.

Think about the very essence of your business. Are you dipping your toes in water unknown to you? If so, you may be giving yourself an unfair disadvantage compared to others in the field who know the ropes. Seriously consider opting for a niche you know and understand as you’re more likely to build an effective and sellable solution built on real-world problems you can easily identify, frame, and understand.

Finding harmony within the business is also conducive to making money. Aligning your company environmentally cuts back on a waste of resources and saves you funds. You may even find the odd green business grant floating about in your local area. 

In the same breath, harmony with staff prevents waste of human resources – both in terms of the number of sales and quality of skill. Instead, try rewarding effort and encouraging ownership to boost creative solutions from the myriad minds within your company. You may find that the hive-mind approach, working as more than the sum of its parts, produces unique ideas that could revolutionize your company.

Fathoming new ideas to boost your business doesn’t have to be a chore, but it does mean asking some honest structural questions. While this can be frightening, always remember to include robust feedback metrics and measure this feedback frequently and effectively. These patterns form the blueprint to success, increasing profit and paying off that pesky SBA loan.

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