Profit is a phase for most small businesses, and all business owners are aware of this norm. It is just a part of running a business. The rest of the time goes into figuring out ways to siphon money from stagnated projects to newer ones that need funding. Business owners are struggling to pay bills and creditors the rest of the time. Smaller companies have lesser options of cash inflow, and that is the truth.
Most business owners feel flustered with multiple creditors, bill payments, and interest rates. Most small businesses run on credit. The owners struggle in vain to get off the hamster wheel of debts and finally trip and fall headfirst into bankruptcy. Many entrepreneurs think that they do not have as many funding options either due to the small size of their business or due to the lack of available resources. This is not true anymore.
The smartest way to get a grip on your business debts is to apply for debt consolidation. This is when you trade in high debts for easier ones. You can coalesce your existing business debts and take out another big loan to pay them off at one go. This is business debt refinancing. You can pay off the new large loan later in easy installments.
How is a business debt consolidation loan helpful?
This kind of loan helps in paying off many creditors at one go. Here are some of the advantages of consolidation loans that all recognized debt Consolidation Company’s offer –
- The new loan covers all existing debts from multiple creditors.
- The new monthly payment is lower than the net amount you are paying right now.
- There is only one, flat rate of interest. You do not have to handle multiple calculations each month.
- Paying less should help you save more and rake in more profits at the end of each month.
Debt consolidation should breathe in a new lease of life into your business. It should make running the business easier for you as well. To understand what each company is offering, go through their debt consolidation reviews before signing on the dotted line.
Bankruptcy vs. business debt consolidation: which one is better?
Debt consolidation is much better than declaring bankruptcy. Many people think bankruptcy ushers in a fresh start for companies who are stuck in a rut. However, it is rarely true. Most small businesses who declare bankruptcy find it almost impossible to bounce back. The lack of a credible credit score and reliable investors make it ever harder for companies to start afresh. Declaring Chapter 7 or Chapter 11 bankruptcy means countless court appearances, tedious trial procedures and tackling more bills.
Debt consolidation is a much amicable process that wipes your slate clean without questioning your business prowess. Consolidation loans also offer a fresh start to business owners by repaying all outstanding loans and providing new financing for new projects. You will find it much easier to pay off the new loan for the lump sum since your credit score will not suffer if you take out a consolidation loan. In fact, the easier payment terms ensure a better credit score in the oncoming months for those who are looking for a way out of many payments and high APRs.
Can you start your own business with thousands in student loan?
A recent study shows that a typical college graduate has about $37,000 in theloan as of 2016. It is a staggering number. Millennials are stepping into the world with a sizeable loan baggage. This is 6% more than the students who graduated in 2015. As the year’s progress, the amount keeps increasing.
At least 20% of these graduates will go onto establishing their own business, and a handful of them will emerge as successful, free from all debts. How? What is it that this fraction has to gain financial freedom?
No magic wand can make your student loans disappear. The path to success if a trying one. It requires endless patience, cunning, and personal sacrifice. The one way you can see some progress at the end of this loan-laden path is loan consolidation. Consolidating your student loans and business loans is a reliable technique to get the upper hand in a similar situation. Debt consolidation is your way out when your existing loans start suffocating you.
Business loan consolidation is definitely for the millennial entrepreneurs. However, this is not just for those who are juggling with multiple business debts. It is definitely for those who are willing to see some success in their business. This is for those who are ready to welcome better loan management and repayment.
If you are a businessman fresh out of college, you know what we are talking about here. Consolidation can take care of both private and federal student loans, so your business profit does not entirely go into paying off your loans. Federal loans are the easiest to consolidate. A good debt management company can restructure your payments and help you redistribute your resources. A graduated payment plan is sometimes more profitable for business executives who have federal student loans.
Remember, no matter what kind of loan you have, when you start out, your cash inflow will be tight. Graduated payment plans for your outstanding debts will give you the breathing space you need before you can start paying off your student loans.
If you have a good credit record, you will find it easy to consolidate private loans as well. Income-based payments and pay as you earn are a few programs to help you pay off your student loan while you earn steadily from your new business. Your monthly payments usually bear caps at 15% or 10% depending on your income and mode of payment. This makes repayment of your insurmountable student loans as smooth as a baby’s cheek.
Bootstrapping is possibly the oldest technique that even Ford lived by when he started out first. You should always take into account your loan amounts, personal income, responsibilities and stakes before you make a business loan decision.
Author Bio: Terry Godier is an e-commerce finance analyzer. He works with several leading e-commerce platforms to determine the factors that drive debt consolidation reviews.