A business owner may want to consolidate business debt for many reasons. For instance, if multiple loan payments are becoming difficult to make, if interest rates are high, or if making loan payments is constricting business growth.
How Does Business Debt Consolidation Work?
To consolidate business debt with a debt consolidation loan, take these steps:
• Consider your reasons and goals for business debt consolidation.
• Add up all your business debts, then decide which ones you want to consolidate.
• Review each business debt to see if there are any prepayment penalties that you will either need to avoid or include in the payoff amount.
• Look at the potential sources for a debt consolidation loan and compare their loan terms.
• Get your application paperwork in order including bank statements, financial documents, personal and business credit scores, and your business plan.
• Apply for a loan and make sure the information is accurate and honest.
• Once the loan is approved and funded, pay off the debts that you have selected. Confirm with the lender thereafter to ensure that the loan is recorded as paid in full.
• Make timely payments on the new loan.
The Pros of a Business Debt Consolidation Loan
The pros include saving time and simplifying the accounting process by reducing loan payments and improving the company’s cash flow. Also potentially getting a lower interest rate on the new loan and boosting the company’s credit score.
The Cons of a Business Debt Consolidation Loan
The cons include that you may pay more interest over time because the new loan starts the loan timing over. Additionally, your cash flow issues may not get resolved solely by a consolidation loan.
What Are the Sources of a Business Debt Consolidation Loan?
The sources can include a bank or credit union loan, an SBA loan, alternative lenders, and specialized financing organizations.
Seek Expert Financing Assistance
Contact Ideal Financial Group for the financing that you need. We have a full spectrum of financial products designed to provide your business with the capital necessary to prosper.