If you are a small business owner with several different loans to account for, you may be paying more in interest than you need to. Also, you might be giving yourself more work unnecessarily. Debt consolidation, taking out one larger loan to pay back several smaller loans, may be a good option for you to simplify your life and improve the financial health of your business. This post will discuss possible advantages to small business debt consolidation options for owners like yourself.
Fewer Monthly Payments
Fewer monthly payments is a considerable benefit to debt consolidation. As a small business owner, you are sure to have more than enough financial information to keep track of between your own needs and the needs of your business. Consolidating your loan will take some of that workload off you plate by lowering the number of payments you need to make monthly. Instead of paying varying sums to four different institutions, now you can make one larger payment. This is especially beneficial for you if you feel that you have a hard time keeping track of various payment dates and amounts.
Lower Interest Rates
This benefit cannot be understated for any one looking to consolidate debts, but especially for you the small business owner. By consolidating your debts you may be able to decrease the amount of interest you are paying on the total sum. Instead of paying a percentage on each single loan, you will have to pay a percentage on the larger amount. You will have to do some math to guarantee that this is the case with your debts, but odds are good that you will be able to save some money this way.
Longer Repayment Period
This particular point can be especially advantageous for small business owners looking for lower monthly payments on their debts. Longer repayment periods are not guaranteed by every company offering consolidation loans, so this may not be guaranteed. However, if you happen to apply for a consolidation loan through the United States Small Business Administration, you will reap the benefit of a 25 year repayment period. If you are in need of small monthly payments and a longer repayment period, you may want to apply for a consolidation loan through the SBA to ensure you have this added option.
Options for Lower Rates
An added benefit to small business specific loan consolidation opportunities is the option to offer other assets as collateral to obtain a lower interest rate. You may be able to put up business assets in return for lower interest rates than those offered to individuals. Of course, this does also impose the risk that if your loan falls into delinquency these assets can, and will, be seized. If you are able to guarantee that this will not be the case for you, then this can be a considerable benefit to debt consolidation. If however, you do not have a financial security net to fall back on should your business fold, you may be safer sticking with the higher interest rate.
There are many advantages to debt consolidation for small business owners like yourself. If you are considering this option, research several institutions to get an idea of what is being offered to you. Make certain to look into options provided by the Small Business Administration, as they offer a longer repayment period that many in the private sector do not allow for. You have taken the first step to regaining control of your small business’ finances. Now, make sure to conduct further research to guarantee you are making the best financial business decisions for both your small business and yourself. Before you know it, you will be well on your way to improved financial health.
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