Businesses can be confounding. While some have seemingly clear brand values and propositions, others can have equally mind-numbing paperwork that can muddle up your basics. In the end, we have come to understand that businesses are a little bit of luck mixed with much outstanding effort and intelligence. Talent is abundant in startups and SMBs. That is why, when a new company hits troubled times, some financing companies and loan companies come together to help them out.
In 2017, the question is not about how to find consolidation companies. It is about how to find one that is genuine and helpful for your business. The issue is gradually becoming a crucial one since more companies are treating loan consolidation as a DIY project.
If you are planning on consolidating your loans, these are the few steps you must follow
1. Companies will try to tell you; it is the solution
A debt consolidation loan is never the answer. It is at best, a means to the settlement of financial independence. This is the first trap in the path of loan consolidation. Going for a consolidation loan just means, you are opting to pay off your many, small loans. The new loan with the consolidation loan will still be outstanding. This is nothing but a restructuring of your debt, so they become more manageable. A loan company cannot make your previous loans disappear.
2. Consolidate the right debts
Suppose your business has ten debts. While debt no. 1, 2, 3, 5 and 7 are big loans with big interests, the rest of them are quite manageable. However, when it comes to consolidation, you decide to assimilate loans 1,2,4,6 and 8. You leave out 3 and seven although they bear sufficient interest rates each month. This result is a bigger hotchpotch where you end up paying the smaller loans with less significant interests and keep the larger ones open. Now you will have to pay your old creditors as well as your new creditors.
This is why you need to consult an expert business loan counselor first. He can tell you which loans to coalesce and which ones you can transfer. This is true for multiple credit card debts. We always advise businesses to transfer all the debts to 0% interest credit cards. Do make sure that your credit card company has no transfer fee!
3. Do your market research
We have seen so many businesses succumb to high-interest rates. This happens when you decide in haste. Business is a serious affair and money is its lifeblood. You cannot be hasty or whimsical while making business decisions. Do not just go by your gut feeling. Back it up with reason. Businesses land up in a financial mess due to bad decision-making. If you are already in a cesspool of credit card debts, due slips, and unpaid bills, try doing some detailed research. We know how challenging and hopeless it can seem in your situation. However, you need to make better decisions that will put your business finances back on track. While consolidating loans ensure that you find the companies that give you the best interest rates. The repayment terms must also be amicable. You should not sign on long repayment terms that end up costing more than the initial payment rates. Calculate your APR in advance to avoid all decision-making pitfalls.
4. Have a realistic repayment plan
The biggest mistake you can make is attained complacence. You cannot sit back and relax thinking all your debts are gone. In reality, you end up engaging your company in new loan terms. The new consolidation loan needs repayment as well. Now, you can either sit down and chalk out a practical and working plan with your business masterminds, or you can turn to a professional business debt counselor who will put your ideas into perspective. Be sure not to work with companies that promise debt negotiation and debt settlement. This process involves dealing with your creditors directly. The consultation process is not always pleasant, and it can put your already threatened credit record in immediate danger. The idea is to work with a company that gives you lucrative offers of debt consolidation loans along with debt management and counseling.
5. Do not use your house as collateral
Think of it this way – you already have a business whose future is somewhat unsettled. In this situation, do you want to out your biggest asset in danger as well? One of the first steps of getting a consolidation loan is to evaluate your credit score. You can get a paid copy of your FICO report. This will be somewhere between 300 and 850. If your score is above 700, it is wonderful. However, that is rarely the case for companies seeking consolidation help. If your loan is below 600, you will find it difficult to get a loan from traditional sources including banks. There are private banks and credit unions that will ask for collateral (your house or your vehicle, depending on the loan amount) for the loan. If your business does not manage to revive itself, you will end up losing both your dream and your solitude. Instead of going for a secured loan, you can go for an unsecured loan that requires no collaterals. Most private online companies charge a higher interest rate as compared to the banks, but they can give you the money without the credit checks. Just be sure to conduct a thorough background check before you sign on the dotted line.
A business thrives on financial well-being. If your business is suffering from the lack of cash inflow, you can seek help from one of the verified online lending companies in consolidating your debts. It is a perfectly safe and smart way to buy more time for your business to recuperate.
