How Does Business Debt Consolidation Work?

How Does Business Debt Consolidation Work?

How Does Business Debt Consolidation Work? 

 Is business debt consolidation for you? If you are considering debt consolidation loans, know that it is not the same as refinancing your existing debt. Think of consolidation as bundling your loans while refinancing is taking out a new loan to pay off an old one. Do you have a lot of small business debt? Consolidation can help.

Is Debt Consolidation Right for You?

Basically, debt consolidation is a loan that is acquired to pay off other, often-smaller debts. This can lower what you pay monthly to creditors, while also lowering interest rates in some cases. Make sure that the debts you choose to consolidate don’t carry a prepayment penalty, as these may be less suited to consolidation than other debts.

Consolidation Can Save Money

While your interest rates may not be significantly lower when consolidating, it can save you money month to month. Since you will be making one payment to cover ‘bundled’ debts, you likely will be paying less. This provides you with more liquid assets and cash on-hand.

All Consolidation Loans are not the Same

Always work with established and reputable lenders when consolidating. Also, review the terms carefully to ensure you are aware of what you are agreeing to do. Since all consolidation loans and terms vary, it is reasonable to have an industry professional review the documents and arrangements for you. This could be your banker, lawyer, or accountant.

Consolidation Streamlines Payments

Paying bills each month eats up your time; consolidating makes payments easier and more streamlined. Plus, it is easier to keep track and monitor in one monthly payment. This can be an invaluable time-saver if you do your own books.

Interested in learning more about debt consolidation? If it sounds like it could work for you, take time to talk to the money experts at DrawBridge Capital today.