Business Debt Consolidation Loan: Qualify for the Best Rates
A business debt consolidation loan allows small business owners to pay off multiple debts through a single loan (and preferably one with more favorable rates and terms). While financial advantages are always a motivator, many businesses simply prefer consolidating since it removes much of the stress of managing multiple payments at various times of the month.
As a direct lender, Fast Business Financial helps small business qualify for some of the best business loans. Not only can we help you be approved for the most lucrative rates and terms, we can get you financed fast — typically within a matter of days, not weeks!
See if You Qualify for Business Debt Relief
If you’ve been looking into business debt relief, Fast Business Financial has some great options for you. Consolidating can help you free up working capital and remove much of the stress and anxiety in managing your business’ finances. Plus, you can take advantage of low rates and generous terms that are among the top benefits of working with a direct lender.
We are currently offering business loan consolidations with the following rates and terms:
|Borrowing Limits||Terms Durations||Interest Rates|
|$10,000 to $1,000,000+||180 days to 5 years||7% to 25%|
Why shop around? If you’re in need of business funding, we invite you to apply to Fast Business Financial. In the last five years alone, we’ve helped small business owners secure over half-a-billion dollars in financing.
Apply today and see if you qualify for a business loan consolidation with a line of credit up to one-million dollars.Apply Now
How to Qualify
Before approving your loan application, your bank or lender want to know where you are with your finances, and especially the amounts and types of loans you are seeking to consolidate. Lenders use this information to determine credit worthiness and calculate the risks associated with the loan.
Here are the top items lenders will look at as they evaluate your credit line application:
- Existing debts (types and amounts)
- Credit score (personal and business)
- Tax returns (personal and business)
- Borrowing history
- Time in business
The better your credit score, revenue-to-debt ratio, and business and borrowing histories, the greater the likelihood your application will be approved. Direct lenders such as Fast Business Financial can often help businesses secure better terms and rates on consolidation loans since there are no “middlemen” adding to the cost of the transaction.
Using Business Debt Consolidation Loans to Free Up Capital
As most financial advisors will tell you, there’s “good debt” and “bad debt.” For many small businesses, taking on debt is one of the best ways to expand a business’ opportunities and the capabilities of their operation. And, statistics from the Small Business Administration show that 75% of all small business funding comes by way of borrowed capital.
In the early years, business owners tend to rely more on reactive decision-making rather than proactive financial planning. This can sometimes lead to businesses taking out one short-term loan after another. For example, a business could take out a loan to purchase a piece of equipment, then later another loan to cover a payroll shortage. The accruing interest on multiple short-term loans or lines of credit can really start to add up.
By taking out a line of credit with more favorable terms, business owners can give themselves some “breathing room” in terms of paying down debts.
Using Business Debt Consolidation to Your Advantage
Maybe it’s become a “borrower’s market” or your personal credit score has improved; there are many reasons small business owners look to consolidating their debts.
Beyond the financial perks, there are other reasons you may want to consider consolidation:
Manage payments easier. When a business owner is paying multiple lines of credit, it’s easy to forget that much of their payments are going toward paying off the interest. By consolidating and paying on a single line of credit, business owners often find it much easier to put a dent into the principal of the loan, therefore saving them money over the long-term. This also leaves open the possibility of paying off debt sooner.
Juggling multiple loan payments is also risky; you may have Then there’s always the possibility of missing a payment due to a hectic week at work, which can cause your credit-issuer to let your interest rate hit the cap. It’s never a good thing to see your interest rate jump from 4.5% to 29.99% overnight.
Save time. Time is money. Keeping track of multiple loans and scheduling payments is a distraction — albeit a necessary one — of operating a business. Having a single loan payment at a fixed day each month is one of the best ways to ensure payments are made on time and can be planned in advance.
Reduce your stress levels. Juggling multiple lines of credit can be stressful. There are dates and amounts that need to be constantly checked against cashflows and operating budgets. For this reason alone many small businesses will opt to consolidate, even if doing so means a higher payoff amount.
Reduce interest rates. Maybe interest rates have fallen since the business owner originally took out the loans, or even raised their credit score. There can be a number of financial incentives to consolidate business loans.
Boost your credit score. Creditors love consistency. If you’ve had one or two late payments in the past due to forgetfulness or scheduling errors, making one loan payment each month may be a great way to ensure payments are made on time.
Are there Disadvantages to Consolidating Business Debts?
Every type of business financing comes with its own qualities. Timing is also an important factor; consolidating might be favorable in the future, but it may not coincide with the current financial goals of your business.
Here are a few things you should consider when applying for a line of credit to cover multiple business debts:
? Better interest rates. You may not get an ideal rate.
If your credit score has slipped in recent years, now may not be the right time to take out a line of credit to cover your business’ debts. You may end up paying more interest. The last thing a business with budget problems needs is additional monthly expenses.
? Better interest rates. Consolidating may not be the answer.
Taking out a new business loan never answers the underlying problems of a business’ cash flow issues. If your business has more cash going out than in, a business line of credit only serves as a temporary bandage to a much larger problem: your business model. Before you apply, consider other steps you could take. These may include cost-cutting measures or raising rates through value-added services.
? Better interest rates. With a longer term, you may end up paying more.
Don’t be fooled by loan offers with suspiciously low interest rates. Remember: a loan used to satisfy multiple debts often has a longer term. This means the principal will accrue more interest over the lifetime of the loan.
Like any type of loan offer, you should carefully examine the terms, rates, and conditions and ensure these are in line with your business’ short- and long-term objectives. If you have an accountant, you may also want to seek their advice.
? Better interest rates. We love small businesses.
If you ever have a question on what type of financing option will be in the best interest of your business, please feel free to give us a call at 866-277-2907.
Struggling to Keep Up with Payments? Don’t Wait ‘til You’re Behind.
If you ever notice it’s becoming increasingly difficult to keep up with your business’ loan repayments each month, this is certainly the time you should looking to consolidating and purge your operating budget of any unnecessary spending. Once the credit bureaus catch wind that you are behind on payments you may find it next-to-impossible to consolidate or take out additional loans. So, don’t wait… consolidate!
Business Loan Refinancing vs. Consolidation: Is there a Difference?
Sometimes you will hear the terms “debt refinancing” and “loan consolidation” used interchangeably. While it is true they share some similarities, these are altogether two different financial products.
When you refinance a loan, you are essentially paying off a single loan (typically with a higher interest) using a line of credit with more agreeable rates or terms. There are several reasons you may do this. For one, your credit score may have drastically improved, creating an opportunity to refinance at a reduced rate. Secondly, interest rates have likely fallen since you signed up for the loan initially, making refinancing a money-smart decision. That is refinancing in a nutshell.
With debt consolidation, you are paying off multiple loans with a single line of credit. While some businesses consolidate for the savings incentives, others do so to simply make repayments more manageable and/or affordable.
To put it simply, with debt consolidation, you are taking out a line of credit and using those proceeds to pay off multiple loans, often to take advantage of better rates and terms.
Why Do Some Businesses Consolidate at Higher Rates?
Sometimes debt consolidation doesn’t always lead to a reduced interest rate. So, why is debt consolidation still considered an attractive option to well-informed borrowers? It comes down to convenience and manageability; making a single payment each month is much easier than keeping a calendar of when each loan payment is due. As a busy business owner, the time saved by tracking and paying one loan may prove to be the better option.
Using an SBA Loan to Consolidate Debts
Since the goals of an SBA loan is grow businesses, many are surprised to learn that these types of loans can be used to consolidate existing loans — even if one of those existing loans includes an existing SBA loan. And, you must have a reason to refinance or consolidate. This can include the original loan being over-collateralized, an interest rate exceeding the SBA’s maximum, or the debt is held on a credit card or revolving line of credit. To learn about other situations where your debts may be consolidated through an SBA loan, visit the Small Business Administration website.
Currently, Fast Business Financial is offering SBA loans starting with the following rates and terms:
- $5,000 to $5,000,000 borrowing limits
- 5- to 25-year terms
- 7.75% APR
Business Consolidation Loans: Unsecured vs. Secured
Once you decide to consolidate your business debts, the next step is to consider going with a secured or unsecured loan. So, what are the differences between these two options?
The terms “secured” and “unsecured,” are confusing to some, but if you look at these two terms from a lender’s perspective it will begin to make sense; a secured loan offers some form of collateral or “security,” whereas an unsecured loan makes no promise of securing the loan through equitable collateral.
Secured debt consolidation loans. When a business takes out a secured loan to consolidate debts, they will offer something for collateral. Collateral can include machinery, property, or any combination of tangible items with an appraised value.
Those applying for secured loans usually do so to take advantage of lower interest rates. Since the loan is guaranteed against some form of collateral, some of the lender’s risks in financing the loan are moved to the borrower. Yes, lower interest rates are great. But, before you apply for a secured loan, ask yourself if you can afford to lose the collateralized property if you are somehow unable to pay back the loan.
Unsecured debt consolidation loans. Businesses that take out an unsecured loan may do because they lack collateral or “security” in the form of equitable property. But, in many instances, business owners elect to forego collateralizing their debts to ensure assets are not seized if their repayment obligations are sidetracked.
If you do choose to obtain an unsecured line of credit to pay off debts, there are a few things you should keep in mind. To qualify for an unsecured loan, you must have a decent credit history. Secondly, you can expect to pay a higher interest rate since most of the risk associated with the loan is now on the financial lender.
If you’re wondering whether your business should opt for a secured or unsecured line of credit, the lending specialists at Fast Business Financial would be happy to answer your questions. Give us a call today by dialing 866-277-2907.
Get Started with Fast Business Financial
Is your calendar dotted with payment reminders? Are you finding it more and more difficult to keep up with separate payments? Fast Business Financial invites you to give us a call to discuss the business debt consolidation and refinancing options available to you. We have helped thousands to small businesses to organize their debts and we would be happy to recommend whether loan consolidation or debt refinancing will be in the best interest of your business goals.
To get started, you can apply online or give us a call to speak with a loan specialist.