If you are in a business and especially a new one, it is natural that you will need a lot of funding for which you may have to take on multiple debts. If you see that the outstanding debts are swallowing your business up gradually, there is no need to panic, feel distraught and anxious. You will be able to regain solid ground easily with business debt consolidation loans that are available aplenty from different sources, private or public. Therefore, it is unnecessary to think that your business will soon wound up due to lack of lifeblood.
All you need is a little cash adjustment and a proper plan to control your income and expenses and find different ways in which you can free up your investment avenues. However, you may require some credit counseling for this and even need a stronger strategy if things are way beyond control.
Through credit counseling, you will know about the pros and cons of debt consolidation, its steps and working process to resolve your old debts with a new one.
Deal with the difficult scenario
Modern day business scenario is much more difficult as compared with the previous times. This is the age of vanishing businesses where almost 50% of the startups in America alone have shut down their operations due to lack of funds and that too within the first five years.
However, surmounting debt does not essentially mean that you have to cut down your funding options. Not only startups and SMEs, but even large businesses also face the brunt of the economy that is struggling all over the world. Chances to overcome debt issues are however more now with the business debt consolidation loans that not only help you to repay your outstanding debts off but also provide you with some extra cash to make further new investments.
The concept of a business debt consolidation loan is quite simple and is much similar to secured or unsecured personal loans wherein you collate all your small and medium loans that are outstanding into one. You can know more of it from nationaldebtreliefprograms.com or from your debt counselor.
You will know how much you will need to pay your creditors each month for your principle, interest and penalties. The most significant thing about debt consolidation is that you do not need to stop making payments just like in debt settlement and therefore your business credit score is not affected negatively as well.
Reasons to take on a debt consolidation loan
There are several reasons why you should opt for a business debt consolidation loan instead of refinancing or debt settlement that may sound synonymous. Knowing about these all you will not be confused when the creditor uses the terms interchangeably. Ideally, the benefits of loan consolidation often outweigh the advantages of other methods. The reasons you should opt for such a loan include:
- You can leverage other debts from several sources so that it does not hurt your credit score or hamper the cash flow of your business or even interfere with the productivity of your company.
- You will avoid being caught in a bad jam for a long-term loan with its terrible repayment terms. With such a loan taken, you can adjust the repayment terms according to your convenience.
- When you have a single loan you can avoid getting confused with the different loan terms that have different rates of interest rates, fees, and amortization schedules.
- The APRs of these loans are much lower and are usually flat instead of a variable. This rate of interest being low you have less chance of failing any payment and incur unwarranted penalties.
Therefore, with a lower flat rate and transparent fees, these loans are the best resource to find an easy way out of your growing and outstanding business debt.
Government support available
The government is also in favor of consolidating startup funding and is actively supporting it with far more liberal government policies issues currently. This is good news for the business environment as with such favoring more businesses are coming up, large and small, in the field of e-commerce and technology.
There has been a steep rise in the industry investment in the past couple of years as these favors from the government has opened new doors for the entrepreneurs to explore newer and better areas of opportunities.
Providing ready funds and tax benefits, such policies take care of the investors apart from the innovative entrepreneurs. Seed investment is further encouraged beyond the fair market value that is usually meant to incubate the early age startups. It is the same provision that is available in venture capital funding as well.
Furthermore, governments now are more liberal in this matter and are funding women entrepreneurs as well as those startups that belong to suppressed or backward sections of the society.
There are also different schemes available to take on such loans that vary according to the size and nature of the business. These schemes are designed to ensure free access to these institutional credits.
Keep things simple
When you consider taking up a consolidation loan it is important that you keep things simple and ensure a bit of caution. Since such loans are available far more easily does not mean you will take on unnecessary loans when your startup is in a fledgling phase. It is better to stick to your budget at all time and cost so that you are confident always about your ability and affordability to repay.
Take some time to think how to use the money sensibly, identify the vital expenses of your business and those that can wait for the time being. Make sure that you prioritize your debts and at the same time make sure that all vital bills such as rents, utilities, taxes, and mortgages are paid.
As everything is relative in business you must triage your payments and project your moves properly. Differentiate between urgent and non-urgent needs and debts and act accordingly so that your move does not prove to be catastrophic for your business.
