When you see your outstanding debts swallow your business gradually, you can feel anxious and distraught. You may even feel that your business is suffering days on end without lifeblood.
Just a little cash adjustment might be all you desire to free up your investment avenues. This can be possible through credit counseling for some and for others a stronger strategy might be necessary.
Credit counseling is something everyone willing to free up some cash from their monthly budget should attempt at least once. This is also the preliminary step of debt consolidation that people should always opt for before taking out a new loan to resolve their old debts.
In the age of vanishing businesses
Did you know? Almost 50% of the start-ups in America shut down operations due to insufficient funds within the first five years. Surmounting debt does not have to cut off funding options or survival rates for SMEs and start-ups.
Even larger businesses, which are right now facing the brunt of the struggling economy, have chances to overcome their debt problems. Debt consolidation loans can help you pay off your outstanding debts and even find you extra cash for new investments.
The concept of debt consolidation is quite simple. A debt consolidation company helps you figure out all the payments you need to make more than once per month or recurrently every month. Next, you can collate all these small and medium outstanding loans into one.
This will tell you exactly how much you have to pay to your creditors regarding principle, interest, and penalties. Then, you can apply to a consolidation loan company for a lump sum that you can use to pay off all your creditors at once.
Unlike a debt settlement company, you don’t have to stop payments, and your credit score does not suffer either.
Why do businesses ask for debt consolidation loan assistance?
Refinancing, debt settlement, and debt consolidation are not synonymous. Your creditor might use the terms interchangeably, but refinancing and consolidation have distinct advantages and disadvantages.
The benefits of debt consolidation often outweigh the pros of other methods. Businesses might need consolidation loans for several reasons.
Leveraged too many debts
Businesses are likely to take loans from several sources from time to time. Having 7 to 10 short-term loans can dampen your credit scores, interfere with your company productivity and hamper your business cash inflow.
Apparently, this may not seem very disruptive, but it can become very difficult to qualify for a long-term cash flow plan or a long-term loan on amicable interest rates. This renders the businesses unable to qualify for anything other than high-interest rates and high APR loans.
Caught in a bad jam
Sometimes, entrepreneurs know exactly what they are getting into before they sign up for a long-term loan with terrible payment terms. Now, if you identify with this situation, you know how it was impossible to avoid it or find another source of cash for your business operations.
Now, just because you had to make a tough decision, does not mean you have to bear the effects of it throughout the payment terms.
You can adjust the payment terms as per your convenience. Debt consolidation loans will allow you to pay off these annoying little loans completely and then leave your company enough funds for new projects. Since you are not in a fix anymore, go ahead and have a look around.
Look for the consolidation companies that are offering you the best terms and services. Refinance your high-interest loans into a single payment at new and amicable interest rates!
Dubious loan terms
Many different interest rates, fees, loan terms and amortization schedules, can confuse lenders. In most cases, entrepreneurs end up with bad loans and unscrupulous lenders because they simply do not understand the terms of their payment.
A couple of months into such loans, these entrepreneurs find that the APRs are much higher than they had bargained for or the interest rates are the variable instead of being flat. Sometimes, they experience unwarranted penalties and fees throughout the loan term.
Opting out is always an option with debt consolidation loans. These loans provide you enough money to pay off these troublemaking small and medium loans in one go.
Most consolidation loan companies for businesses have flat interest rates and transparent fees that help the business owners find their way out of debt.
The final words to all debt consolidation loan applicant
To become a good candidate for any reputable debt consolidation company, you simply need to have a respectable FICO score. The requirements usually vary between companies and the amounts applicants need a loan.
The interest rates for the loans also depend on the credit score, payment period and the amount. You must remember that a good credit score is a guarantee of repayment. Since a consolidation loan is a form of an unsecured loan, a bad credit record can cost you 30% or even more regarding interest.