Get Your Business on the Right Track With a Consolidation Loan
For small businesses, expenses can quickly spiral out of control. Instead of dealing with a financial mess, or even worse, the possibility of shutting your doors, consider a consolidation loan with WorldWide Capital Management. With lower interest and better terms, we can help get your company back on track.
Whether you need to bail your business out of debt or you want to start building a financial safety net, consolidating your loan is an excellent option. According to the Small Business Administration, roughly 30 percent of all new businesses, regardless of industry, ceased operations within the first three years. More shocking is that about 50 percent fail within the first five years of operation.
You’ve worked too hard to allow that to happen. By consolidating your debt, you don’t have to become another statistic.
Benefits of a Consolidation Loan
With a consolidation loan, you roll outstanding debt into one loan. Not only do you end up with one payment but you’ll also have a lower interest rate, thereby saving a tremendous amount of money. The one caveat: When you take out a consolidation loan, you want to put yourself in a position of paying off creditors as opposed to only paying down balances. Otherwise, you would end up with multiple payments, some at a higher interest rate, which completely defeats the purpose of borrowing money.
Types of Consolidation Loans
The first option is a secured loan that would use your business assets as collateral. If you fail to make your payments as promised, the lender has a way of recouping the money loaned. While there’s nothing wrong with a secured consolidation loan, the second option, an unsecured loan, may fit your needs better.
The only drawback to an unsecured loan is that often, a lender charges a higher rate of interest compared to a secured loan. While you need excellent credit to qualify, this consolidation loan eliminates any risk of having your assets seized. Regardless of which option you choose, you always want to pay on time the amount due, if not more, as a way of protecting your credit rating.
When to Secure a Business Consolidation Loan
There are five primary reasons for considering a consolidation loan.
Improved Credit Score
If you’ve significantly improved your credit score since starting your business, this might be the perfect time to secure a consolidation loan. Instead of paying a high-interest rate on money borrowed early on, you’ll have a much easier time qualifying for a loan with lower interest and better terms because of your improved credit.
Improved Credit Profile
A consolidation loan also makes sense if you’ve achieved a better business credit profile. In response to consistently making payments to your debtors on time, you’ll see a vast improvement in your credit profile.
Keep in mind, you shouldn’t have any tax liens, bankruptcies, or repossessions, still have a high percentage of available credit, and preferably, have more than one credit bureau reporting on your business. Combined, that proves to lenders you’re low risk, making them more willing to offer a consolidation loan.
Improved Business Finances
If you’ve started to see a much higher level of sales, which in turn, improves your company’s financial position, check out a consolidation loan. The more revenue your business generates the better candidate you become. Beyond increased revenue, some of the key times for taking out a loan include following a busy season, when you’ve dramatically reduced expenses, and after filing taxes that show improved profitability.
Reaching New Milestones
After reaching new milestones, your chance of receiving approval on a consolidation loan improves substantially. When it comes to loan consolidations, the longer you stay in business, the better chance you have of securing this type of loan.
Improved Personal Finances
How does improving your personal finances help with qualifying for a consolidation loan? Remember, in the eyes of lenders, this is just as important as your company finances. Typically, you’ll need to provide personal information when submitting a loan application, so you want to be in the best financial standing possible.
The Bottom Line
Instead of juggling multiple payments and struggling to keep your business on track financially, consider a consolidation loan. You’ll enjoy a lower Annual Percentage Rate, lower monthly payments, better cash flow management, predictable payments, and the opportunity to borrow additional money in the future. Contact Us today to see how we can help!