Surely, almost every business owner faces the challenges of managing debt. One of the often-used solutions is a debt consolidation loan.
What is Debt Consolidation?
Debt consolidation is simply combining loans and cash advances and refinancing them into a single loan that has more favorable terms. This is a streamlining process intended to make the business debt more manageable and more affordable.
Is Debt Consolidation a Good Choice for Your Business?
To determine if debt consolidation is a good choice for your business, it is important to assess your debt position. First, ask yourself if debt payments are taking a large percentage of your cash flow. Second, review your current interest rates. Are they excessively high? High-interest payments come directly from profits. Third, to make debt payments, do you have to delay payroll or play delaying games with supplier payments? Fourth, do your debt payments prevent you from buying equipment or making other critical investments in your business?
What Are the Advantages of Debt Consolidation?
The advantages include:
Allowing your business to more comfortably manage monthly debt payments. In turn, reduces financial stress.
Improving your cash flow and keeping current with all operational expenses.
Lowering your interest rates and payments. Therefore, improving profitability, or extending debt terms.
Enabling your business to focus on growth and support future financial needs. Rather than dealing with mere survival.
Making debt easier to manage.
What Are the Disadvantages of Debt Consolidation?
The disadvantages include:
A debt consolidation loan can extend the term of the debt. Ultimately increasing interest payments over the life of the loan. Meaning the loan payoff can be more expensive.
A lower interest rate is not guaranteed.
Debt consolidation is no guarantee that prior financial problems won’t be repeated.
It is not a fix if a business model is poor and it won’t resolve deeper issues.
Seek Expert Financing Assistance
Contact Means Commercial Capital to meet your financial needs. We offer a large portfolio of business loans to ensure you have the capital to grow and thrive.