It has never been easier to start a business.
Unfortunately, the same cannot be said for making a success of one. In fact, now that the internet and mobile technologies have made entrepreneurship accessible to everybody, competition is fiercer than ever, and it can be very difficult to stand out in crowded markets.
It is no surprise then that the percentage of failed companies is also on the rise. While this shouldn’t stop you from taking the leap and launching a new venture, it’s important to recognise the risks. Often, it isn’t losing money or even accruing debt which is the problem. It is not having a proper plan for managing it.
This guide to debt consolidation will help you get to grips with one of the best options for handling unmanageable payments.
What Is Debt Consolidation?
Reliable lenders like Latitude Finance provide debt consolidation loans to individuals or businesses which they believe will benefit from a different kind of payment system. They work in a very simple way. The lender awards a loan that is big enough to cover all existing debts.
This type of credit is specifically designed to cater to those who are making multiple monthly payments, to a variety of creditors. So, the large loan is used to settle all of these individual debts. Then, the customer is left to settle the same amount, but as one unified payment.
Debt consolidation doesn’t change the amount that you owe or cancel any of the debt out, but it makes it easier to manage. Instead of multiple payments, you only have one, and it goes to a single creditor. Crucially, if payments are fulfilled, it has no impact on your financial status.
What Are the Benefits of Consolidating?
Well, obviously, there’s the advantage of more manageable payments. Even if your business owes quite a lot of money, you’ve got a much better chance of handling it if you’re not trying to remember a litany of dates and details every month.
As mentioned, it won’t affect your credit rating or the financial status of your business which is extremely important. You’re not declaring yourself unable to pay. You’re just switching to a different kind of system. So, it isn’t the same as defaulting or failing to meet lending terms.
Are There Any Downsides to Consolidating?
The downsides to debt consolidation mainly revolve around perceptions of what it means to merge loans. This isn’t a magic cure for all your money woes. After it is awarded the loan, your business will still owe the same amount. Therefore, you must be sure of meeting the terms.
When it comes to things like mortgage debts, consolidation raises the stakes. There are serious consequences for failing to pay, so it isn’t the right option if you’re unable to settle outstanding loans. This is a route for those who simply need a little breathing room.
What Is the Best Way to Get a Consolidation Loan?
The best step, if you think your business could benefit from debt consolidation, is to consult with a financial advisor. If you visit a reputable local lender, they can talk you through the process and help you figure out if it is the right choice.
If your debts have become unmanageable, they may recommend an alternative route. In fact, your lender will only agree to merge existing debts if they are confident in your ability to pay off the complete sum. You may also need to fulfil a number of eligibility criteria for approval.
