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What Is A Business Debt Consolidation Loan?

It isn’t easy to stay out of debt in today’s business environment. With sales plummeting and costs rising, many small businesses have had to resort to taking out loans with their bank, service providers, vendors and more.  The problem is, all of this debt can be overwhelming; especially when you are trying to juggle dozens of payments to different lenders.

When this juggling act becomes too much to bear, you may have to consider finding a way to pool those bills into a single debt – and payment.  This can be done with a business consolidation loan.

Is Business Consolidation Loan the Right Strategy for Keeping Your Doors Open?

If, after a good hard look at your business finances, you still believe that your business is viable and you can weather the current economic storm (with a little help, that is), then you should consider consolidating your debt to help make paying your bills a bit easier.

Some of the things to ask yourself before approaching a lender include:

  • Do I have a steady stream of income?
  • Do I foresee any upcoming expenses that will need my attention?
  • Do I have a pipeline for new work? Clients? Business?
  • What amount can I comfortably pay per month on my debt?
  • Are my finances still in decent shape?  Is my credit good?
  • Do I have assets that I can use as collateral on a new loan?

Once you have a solid picture of your finances, then it is time to meet with an expert to determine what type of consolidation loan is best for your business and how to convince a lender to give it to you.

Meeting with a Loan Advisor

The best place to begin your search for a business consolidation loan is with the bank or lender that your business has already built a relationship with. Explain to them your strategy for paying back your debt and give them a complete list of what you owe. They may be able to help devise a plan to help you stay afloat until business gets better.

Hiring a Loan Consolidation Company

But, let’s say that your current lender isn’t interested in helping you out.  You may have to take more drastic measures.  Hiring a loan consolidation firm that specializes in business debt may be the answer.  They are qualified (and experienced in) negotiating equitable terms with creditors in order to establish a workable pay back plan.

In some cases, the company can also negotiate forgiveness on late fees and penalties (which will in turn decrease the amount you owe), and come up with a workable payback schedule.

Then, you make those monthly payments to the firm which distributes them to your creditors until each debt is paid in full.  This can be a good option, especially for those who are tired of wielding collection calls.

Things to Watch Out For When Hiring a Consolidation Company

Of course, not every consolidation company accomplishes their end goal. As is the case with any service provider, some are better at their job as others, so be very picky when choosing one to work with you.

Fees too should be discussed thoroughly.  Watch for any hidden fees that a company may charge to avoid paying more than you expect.

Lastly, be certain that any consolidation company you choose has experience in dealing with business debt. Unlike personal debt, business debt can be harder to discharge and negotiate. Plus, you want to be able to continue to work with your vendors as you work to pay down the money you owe them.  This takes a special skill to get a vendor to agree to a payback strategy and continue to offer you their products on a cash basis.

Business debt consolidation loans are not easy to come by these days and landing one can take a certain amount of experience and finesse. Still, if your business remains viable and you want to avoid going bankrupt or simply closing up shop, it is important to do everything you can to get the money you need to lower your monthly expenses while staying in business.  These days, consolidation is often the bets way to do all that – and more.

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