Choose the right time to consolidate business debt

Charlie Brown By Charlie Brown, 19th Apr 2017 | Follow this author | RSS Feed
Posted in Wikinut>Business>Accounting & Finance

Since debt consolidation loans are well known for providing relief, it should never be misconstrued as a desperate measure.

Choose the right time to consolidate business debt

If you own a business and want to apply for debt consolidation loan then you have to target a loan amount that not only pays back the other loans but also generates a surplus that can be used for business. It creates some additional money that can come handy without putting any stress on you. However, to make it happen you have to smart enough to time it right. Besides the additional funds that you will be able to borrow, you can even save some money by availing the new loan at lower interest so that monthly payments are less than what you used to pay. While the right timing has to be done, personal credits, current business finances and terms of the loans that you have already should also be taken into account.

When is the right time?

Since debt consolidation loans are well known for providing relief, it should never be misconstrued as a desperate measure. It is true that some people take recourse to it out of desperation, but that happens because they might have lost the opportunity of doing it at the right time. Make sure that you do not miss the bus when you want to consolidate your loans in the most favorable way.

In order to know when it is right to go ahead with consolidation of loans keep a tab on your personal credit score, personal finances, business credit, business finances and the time you devote to business. When you are high on all these counts, it is a clear indication for you to go ahead with consolidation.

Some typical scenarios

In business, sometimes it is required to take short term loans to achieve quick turnaround time. If you have taken such loan while you have good credit rating, this is the ideal time when you can think about consolidation. There might be another situation when you had taken the loan for business needs but at that time your credit score was poor or your finances did not permit taking any other loan. The loan was intended for a short time booster. As soon as the revenue trend turns positive simply go ahead with a consolidation loan.

What you get from it

Debt consolidation for business can ease cash flow that had throttled. Consolidation brings a whiff of fresh air along with it as revolving credit lines also get released. Payments against loan become more predictable and the most attractive benefit is that you can take loan that allows you to enjoy surplus money even after paying back debtors. The new loan is usually taken at lower interest that generates savings by reducing monthly payments. Debt consolidation comes with a basket of benefits that can prop up business.

Having a personal credit score of 600+ qualifies you for a medium term loan for business provided the business has completed one year and annual gross revenue is at least $25,000. SBA loans are given to owners with personal credit score 680+, business age is more than two years and minimum revenue is $100,000.


Debt, Debt Consolidation

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