Consolidating business debt
It’s nearly impossible to run a small business without incurring debt.In a perfect world, you’d be able to fund all of your expenses yourself and still have profits in your bank account.Maybe your credit situation has changed since you received high-interest loans.Perhaps you faced an emergency that required fast cash, so you had to settle for financing with lots of fees.Now, your situation has improved and you qualify for better rates and terms, so you could receive a debt consolidation loan with a much lower interest rate.In this example, the debt consolidation loan at a lower rate is also a type of refinancing. If you don’t qualify for lower interest rates, your total payments will remain the same.
You receive a consolidation loan that will cover this short-term loan, as well as other loans and credit card debt.
This time, they secure a K loan with a four-year term length and an interest rate of 12%.
Repayments are down to 0 per month, and they’ve attained an extra K of working capital.
Instead of a combination of daily, weekly, and monthly payments, you’ll pay just one lender on a regularly scheduled basis.
You can also potentially receive longer repayment terms.