If your small or medium sized business is going through the rough patch of unable to meet its obligations, then you might be searching for dependable debt relief advice. Well, you are not alone in this: Thousands of small business owners in America find themselves in the situation of facing financial straits.
A plethora of those survive by becoming slimmer and adopting more frugal methods. In most of the cases, they also take help of one or more methods of small business debt relief.
Before you surrender and go for the final Chapter 7 bankruptcy declaration, which will put your company out of business, consider some other options. For beginners, a number of lenders recommend debt consolidation loans to their stressed small business clientele.
Commercial Debt Consolidation Loans
If it fulfills specific criteria, your business may get qualified for a debt consolidation loan from a not-for-profit lender. Such loan types usually carry much lower interest rates than their private counterparts. This can result in making the loan payments easier to afford.
If you are unable to stumble on a non-profit debt consolidation loan or don’t qualify for one, then your next step should be to seek for a loan on the private market. By placing a few assets of your business’s assets up as security for your loan, there is a good chance that you get to secure a lower rate on it. However, this can backfire in some cases: If you get to default on your loan, you could lose those assets.
Debt consolidation loans help you pay off your original unsecured creditors and turn your obligations into one single payment that you have to pay each month. This can prove to be a bonus for a busy businessman who doesn’t have enough time to administer several monthly debt payments.
Shortcoming of a Business Debt Consolidation Loan
On the other hand, debt consolidation loans can easily take up to five to pay down in full. Meanwhile, these credit facilities keep on accruing the interest at the above-prime rates. This frequent increase of interest may affect the limit of the amount which you’ll save via this debt relief method. Without any extra revenue, you might have to choose more severe debt relief options for your business.