Securing viable funding is one of the most daunting tasks for entrepreneurs, regardless of whether your loan or lease is for a startup, or for a well established business. Assuming multiple lines of credit can lead to financial strain, particularly in the event of an unexpected downturn, sudden increase in expenses, or loss of a revenue stream. Consolidating your debts into a single loan or lease can significantly reduce mental, financial and operational stress and make it easier to pay off monthly amounts without tapping into vital resources. Learn more about loan consolidation below.
What is Debt Consolidation?
Consolidation is the process of combining multiple existing lines of credit, loans, and leases, into a singular credit facility which may also include a lower total cost of borrowing (lowest interest rate) and more flexible or lower payment amounts to reduce the strain on cash flow. This is typically done by using funds from a new credit facility to pay off all other outstanding debts (which can also include aged payables), so the remaining balance pertains to the newly consolidated line. For owners that may be juggling several different loans across multiple lenders with staggered payments, consolidation can be extremely beneficial. Advantages include:
The ability to reduce your interest rates
Because the consolidation process involves eliminating extraneous lines of credit, have a single debt to pay often results in much lower monthly rates. In addition, being tied to one source takes away the stress of keeping up with different lenders and institutions.
Ready access to capital
Consolidating your funds makes it easy to dedicate your cash flow to daily operations, payroll, overhead, and other important fundamentals of running and growing your business. Having liquid assets on hand can make it much easier to regain control of your overall finances in less time, and with greater confidence.
Starting off on the right foot
If you are considering pursuing debt consolidation, one of the first steps you’ll want to take is sitting down with your accounting or bookkeeping team to get an accurate picture of your overall financial situation. Knowing exactly where your cash flow is allocated, what areas are lacking, as well as identifying any surpluses will help narrow down your options for consolidation. From there, meeting with your lender will help establish what plan works best for your business.
Securing financial capital that works best for your business doesn’t have to be a point of stress. Working with an industry leading lender like Current Financial puts your business in trusted hands and can help you achieve your milestones quicker, with less hassle.
Ready to take control of your loans and get back in the driver’s seat? Get started now.