If you are nose deep in business debt, it’s time for you to consider refinancing. A history of bad credits may make you think, the road is all downhill from the first default. You may have been turned down by every bank and credit union in town, but let us tell you that it’s not the end of the line.
What is the ideal debt consolidation?
The aim of any business debt consolidation should be to salvage the financial condition of your company. It should achieve four things –
Reduce the number of creditors you are dealing with right now
Reduce the amount you are paying monthly (or annually) at the moment
Buy additional time to pay off the new loan
Receive additional funding from a new source
In case, your current debt refinancing offers do not suffice these requirements, then it certainly is not a solution for your financial problem.
When should you apply for debt consolidation?
Do your business accounts show more expenditure than profit? Are you being boggled by calls from multiple creditors? Are you afraid of going bankrupt? If the answer to any of these questions is a resounding “Yes” then you should apply for debt consolidation immediately.
Do you qualify for funding?
Most banks and credit agencies turn down loan applications of debt consolidation for bad credit loans. However, there are quite a few private companies, non-profit lenders and online consumer counseling agencies that help you negotiate lower rates for existing loans or get you a new loan to cover the costs of the old ones.
You need to check a few things before you approach any traditional bank for a new loan.
Have you been in business for at least 6 months (the requirement may vary from agency to agency)?
Do you have a trending annual profit?
Do you have substantial personal credit score (500+ is standard)?
There are the minimum criteria that most funding agencies and banks check before sanctioning a new business loan.
How do I choose the right consolidation option?
If you fulfill all the above mentioned criteria and your financial advisor states that a new loan can salvage your company’s financial situation then you can approach a number of non-profit debt consolidation companies for a new business loan.
Being turned away from your bank or credit unions can be disheartening but most of the consumer counseling agencies and debt relief companies can get you customized loan options. Working with a debt relief company that caters to all your business financial needs can lead you to financial freedom before the end of the next fiscal year.
All in all, consulting a professional financial advisor before making any drastic moves is a good idea. You should weigh all your options before applying for refinancing.
Author bio: Robert Down is a leading name in the field of finances and business management. He leads a team of brilliant minds who reach out to budding entrepreneurs with ingenious financing plans and ideas for debt consolidation for bad credit loans.