You Need Growth

Your business has been through the initial stages of startup and is now operating relatively smoothly. Your business plan calls for strategic and sequential growth and expansion, and you are ready to go to that level. Unfortunately, getting to that next level involves additional capital investment for marketing, inventory, additional staff, etc., and you don’t have it. You have considered additional loans for the expansion, but you have so much debt now that most lenders would consider you too risky. It is time to discover what you gain from bill consolidation that could put your operation into the category of a business that evolves.

Analyze Your Debt Situation

Chances are, you know exactly how much total debt you have. But you need to evaluate what kind of debt it is. If the debt is collateralized, that is, it is backed by assets you currently possess (equipment, inventory, etc.), then you have some “good” debt. If you have used business credit cards to purchase consumables (office supplies, etc.), then you have some “bad” debt as well, because there are no assets attached to it.

What debt would reasonably be appropriate to consolidate? Certainly, the “good” debt will be easier to consolidate at first, because it has involved one-time purchases which you continue to use, and the assets can be used as collateral in any consolidation. The “bad” debt is probably less important to consolidate because it is continuing debt, that is, you incur that debt regularly as you purchase the consumables for daily operations.

If you are showing a profit each year, and your debt payments have been consistently made on time, you are in a position to seek a consolidation loan yourself. Banks and other financial institutions are more willing to take a risk when they see several years of responsible financial behavior. The goal is to consolidate all of your “good” debt into one loan which will require a lower monthly obligation and free up enough cash to engage in the growth you envision. The interest rate may be higher, but the payment can be spread out over a longer period of time. And, certainly, the debt can be paid off at anytime, usually without any penalty.

If your current situation is more tenuous and you have made late payments on current debt, you may need to seek the advice and assistance of a business debt consolidation professional or firm. There are plenty available and good ones can help you through the process and secure the loan you need. As you research available professionals, look for those that have worked with other businesses in your locale, so that you are able to see first-hand the results of their services. Most will roll their fees into the consolidation so that you do not face a new separate monthly payment.