Small business debt consolidation can help a small business owner reduce overall debt payments and make debt more manageable. By consolidating debt, a business owner may also be able to lock in lower interest rates which can reduce the total payback amount.
Debt Consolidation for Small Businesses
Debt consolidation may be an option for individuals and small businesses that are struggling with current financial situations. Consolidation rolls several debts into one, making it easier for a debtor to manage monthly payments. If your business is struggling with cash flow issues and you are considering the option of consolidation, you will need to take the following steps to complete the process:
- Organize your debt and asset paperwork so that you know exactly how much you owe and what your assets and income include. If someone handles the financial affairs for your business, you can have that person gather the relevant information.
- Figure out how much you need and how much you can afford to pay on the debt each month prior to seeking a loan. This will help you figure out which loan terms are most important to you.
- If you have real property or other assets owned by your business, you may consider using the property as collateral for a consolidation loan. The advantage of using property for collateral is that you generally will be able to get a lower interest rate because it is a lower risk for the creditor.
- Seek out a loan from a few different lenders. You should shop around for the best terms and interest rate. Many local and non-local lenders make small business loans available for businesses who need extra cash flow as long as the business seems like it will be able to make good on the debt.
- Make sure to read the contract for any unusual terms such as early payoff penalties. If you are not familiar with common contract language, it may be best to have your attorney review the loan documents prior to signing.
Getting Legal Help
If your business needs to reconsider its financial affairs, it may be a good time to involve an experienced attorney in your discussions. An attorney can help by giving you the information about your legal options, negotiating for favorable terms with your creditors and representing you in any legal courses of action.