An entrepreneur takes many risks simply by making the choice to start a business. You likely did all of your homework and have an excellent business model you’re using. You likely secured financing through credit cards or a small business loan, both of which seemed sensible considering your anticipated revenue. If business isn’t going quite as great lately, you may be feeling weighed down by your present repayment plan. If you worry that your business may be facing bankruptcy or are feeling the crunch when it comes to finding money to whittle down existing debt, you might be considering consolidating your business loans. According to the Federal Reserve’s Small Business Credit Survey released in 2017, almost one-fourth of businesses that applied for funding during the second half of 2016 wanted to refinance existing debt.
What Exactly is Business Debt Consolidation?
Debt consolidation is essentially the act of combining various loans and lines of credit into a single account at a low interest rate. This is usually accomplished by using the funds from the new consolidation loan with the intent of paying off all business debts, with the only lingering debt as the consolidated loan. If you want to find the right loan, check out your options. In most cases, you can apply and know if you’re approved in minutes.
How Do I Know if Business Debt Consolidation is a Good Solution for Me?
If you’re feeling weighed down by calls from various creditors, consolidation might be the right thing for you because you won’t have to deal with various accounts. You might be qualified for a business debt consolidation loan, so you could make payments that are manageable for you, with a larger percentage of the payments going towards the principal instead of only paying for the interest accrued each month. If you’re trying to keep your small business financial resolutions and one of those is to manage your company’s debt, debt consolidation loans are a good place to start.
What Else Do I Need to Know About Business Debt Consolidation?
If you decided to make the leap from employee to entrepreneur, you know that every business financing solution has some positives and some negatives, and debt consolidation does too. Before you run out and apply for a debt consolidation loan for your business, you need to crunch some numbers for your situation and ensure you’re getting the best deal. Turn to a professional for help and, together, look over the fine print of the consolidation loan and compare the details with all of your current loan agreements. You’ll need to look at the interest rates, minimum monthly payment and fees or other charges associated with opening a new loan. You also need to take the term of the new loan into consideration.
Remember that the ultimate goal of a debt consolidation loan is to ensure your company’s debt situation is more manageable and reduce the number of creditors you’re in contact with. You also want to lower the amount of money you pay each month. If the proposed new consolidation loan agreement is unable to achieve these two goals, it probably isn’t the best solution.
Unexpected challenges often arise in business, and dealing with debt that’s out of control is a scary process. If you believe debt consolidation could be your answer, consult a professional and weigh your options carefully. Each business is different — and all loans are different too — so consider the ramifications of these options before you proceed.
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