How to Consolidate Your Business Debt

January 15, 2016 / Reading: 3 minutes

Accumulating debt can be embarrassing, but it shouldn’t be something you put off just because you are too proud to ask for help or too stubborn to do something different. You could file for bankruptcy when everything fails and you have no way out, but that is an entirely stressful process in of itself, possibly putting a new burden on your personal life.

Instead of digging yourself a hole, start looking for that light switch to show you the hidden path to your way out of business debt, by consolidating it and preparing for a rebirth.

Research Phase

When considering debt consolidation, make sure you understand what exactly you’ll be doing before picking up the phone and possibly getting talked into terms you may not fully grasp. When you consolidate business debt, you are essentially taking out a new loan in order to “pay off” all your current lines of credit, thereby replacing it with one source of repayment; which should be lower than your combined interest rate to allow you to pay off your debts.

You can figure this out by knowing your “debt coverage ratio” that lenders can use to determine what your consolidated loan will look like in-terms of interest rate, length of repayment, and minimum amount per payment. If you can’t get a loan agreement that lowers any or all of these key points, then you may not be the right candidate for debt consolidation, it would essentially turn into you delaying the inevitable and creating more stress on your life.

Going through with Debt Consolidation

So, you’ve come to the conclusion that this might be the right answer for your organization’s present obligation circumstances, you can browse various business debt consolidation specializing lenders to facilitate your new advance. This lender is in charge of arranging the new advance for your benefit, gathering installments from your business, and paying off your past-due credits. These associations act as the go-between of you and your past lenders – so in case you’re still getting calls from banks, those ought to stop not long after your business consolidation is signed off.

Remember that this option is accessible as secured or unsecured; the distinction being that secured credits require guarantee, (for example, any property of value and etc.), while an unsecured advance does not. A secured business debt consolidation might offer a lower financing cost and in this way appear to be more desirable than an unsecured credit. In any case, if your business is in a bad position, that lessened rate may not be advantageous. On the off chance that your business was to default on the secured credit and go bankrupt, you could potentially forfeit your home, in addition your business.

As sudden difficulties emerge in business, managing crushing debt can be a nerve-racking procedure. Take an ideal opportunity to seek-out a qualified budgetary counselor and measure everything you have and what is available to you. Each business and each personal situation is unique, so don’t let anyone rush you into a choice just because it’s what is considered typical for businesses needing help, it’s imperative to consider the consequences of each and every choice.