How to: Debt consolidation and refinance

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How to get debt relief for your small business: Debt consolidation and refinance

 

If you’re running your own small business, whether in the trucking industry or a retail store, in services or construction, you know that sometimes it can get hard to manage your debts. That’s why learning ways in which you can provide debt relief for your small business may be helpful.

 

Let’s go into one option you have when you’re looking to keep your business afloat (and don’t worry, we’ll cover other options in future articles). Let’s talk about getting a consolidation loan for your business.

 

How to consolidate and refinance your small business’ loans

 

Most often, small businesses look to consolidate and refinance high-interest loans that were taken out to solve a short-term issue. Yet it might affect business-as-usual when you’ve got daily, or weekly repayments to make.

 

Looking to refinance those short term loans with a longer term, lower interest rate loan can reduce your monthly payments substantially. One option is the Small Business Administration loan. Another option is to get an alternative terms loan.

 

Getting an SBA Loan

 

In general, SBA loans are the best option. Because they’re guaranteed at the federal level, you’re more likely to get better terms on them, both when it comes to lower interest rates and longer repayment terms. However, the application process can take a long time (weeks up to months) and the minimum requirements are actually quite high. You need to have:  

  • 600+ personal credit score for loans $30,000 to $150,000

  • 650+ personal credit score for loans over $150,000

  • At least two years in business

  • $50,000+ in annual revenue

  • Personal guarantee required

  • No outstanding tax liens

  • No bankruptcies or foreclosures in the past three years

  • No recent charge-offs or settlements

  • Must be current on government-related loans

 

 

Before deciding to go through the application process, it’s also worth checking out the list of businesses considered ineligible for this program.

 

If you and your business don’t check all the boxes for an SBA loan, or you’re not in the best position to go through a lengthy application process, an alternative terms loan is another option for you.

 

Getting an alternative term loans

 

An alternative term loan is also a way to consolidate your business debt. These kinds of loans often have repayment terms of up to 5 years and their interest rates are mid-range. That makes them a much more affordable option than the high-interest, short term debt that causes many business owners cash flow problems.

 

The minimum requirements for an alternative term loan are lower than for an SBA loan and the application process is shorter too. Here’s what you need:

  • 1+ year in business

  • 600+ credit score

  • Seeking to borrow at least $5,000 and no more than $500,000.

  • At least $25,000 in annual business revenues

  • Your business is profitable

 

If you and your business check the boxes for an SBA loan or an alternative terms loan, you can gain several benefits: you get to spread out your loan payments, save monthly with a longer term, smaller interest loan, and decrease your payments from daily or weekly to monthly.

 

If you’re looking to consolidate your debt or restructure your loans, get help from a business debt expert like Creditors Relief. We’re willing to advise you with your debt relief options and our review process is free. Sign up here.

 



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