Getting your business out of the quagmire of debt can be challenging. If your business is new and you are making multiple payments to multiple creditors, you are having a hard time meeting all payment deadlines.
Not being able to make payments during the right time puts businesses on a hamster wheel of debt. Most small businesses find it impossible to meet all payments deadlines and make a profit at the same time.
How Should You Approach Debt Consolidation During a Financial Crisis?
Without the right advice, you are likely to fall into multiple business and debt management traps laid out by unscrupulous lenders. However, here are a few things you can do –
i. Seek advice from a professional debt management company like NationalDebtRelief.
ii. Get a good account manager who can alert you about pending payments and best possible APRs for new loans.
iii. Prioritize your arrears. Pay off credit card debts that have a high-interest rate. Pay off other small debts that have a high APR.
iv. Consolidate your smaller loans into one. Instead of making some smaller payments to different creditors, you will be paying one company. In turn, the company will make all the payments to your creditors.
Is debt consolidation a good idea for startup businesses?
Debt consolidation rolls several small debts, different payments, various interest rates and payment deadlines into one. A consolidation loan is a loan you can take to pay off all your smaller loans. A debt consolidation loan sum may seem huge, but it is much easier to pay off. You will be making a single payment per month, to your consolidation loan company. You will be tackling a flat interest rate and a fixed APR. You may have to pay an origination fee, but that is upfront too. In ideal scenarios, your monthly payment will become lesser than the net amount you are paying right now. Your business will see a profit, and at the same time, you will enjoy financial freedom.
Why is debt counseling mandatory before business debt consolidation?
Most startups fall apart due to lack of funds and investors. The first few months are the toughest for any startup. Cash inflow is low, and the expenses are significant. Not only does this call for a good account manager with years’ worth experience, but this also calls for debt counseling.
The best debt consolidation companies also offer debt counseling for businesses. You can also approach their debt management department. You should only contact experts on this subject. Since they have the power to get you out of insurmountable debt that can otherwise lead to the death of your company.
Debt managers will first assess your business’s finances. They can tell you if you at all need a new loan. Sometimes, startups and small businesses only need to redistribute their funds instead of taking another fresh loan. Debt counseling or credit counseling can help you to construct a new budget using authorized tools and software programs. This will ultimately lead to debt elimination, if possible, without incurring new loan payments.