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 7 Reasons to Get a Debt Consolidation Loan for Your Business

You’re doing your best to keep your business afloat, but if you’re feeling overwhelmed by your financial situation and looking for a way to consolidate all of your outstanding bills, you may be considering debt consolidation loans or lines of credit specifically for businesses. But should you? What are the benefits and drawbacks to these loans and how can you use them to improve your business in the long run? Here are seven reasons why you should consider getting one of these loans and how it could change the course of your business forever.

Increase Your Credit Score

Although many business owners don't need personal credit, it's not always a bad idea. If you're financing equipment or inventory, consider taking out a personal loan in order to increase your credit score. This will make it easier for you to get approved for any business-related financing that you may need in future. Just keep in mind that if your business does take on debt or you do want to start taking on personal loans, work with a lender that offers good customer service and flexible repayment options. You don't want your high credit score going straight down the toilet once you sign on that dotted line.

Lower your Monthly Payments

Lowering your monthly payments is another big reason to take out a business line of credit. Instead of being shackled by high, fixed-rate payments on multiple loans, you'll have one single payment that can be as low as 3% of your total credit limit. Even if you're planning on paying back your loan quickly, lowering your monthly payments will give you breathing room in case things don't work out exactly how you planned. For example, let's say an unforeseen opportunity comes along and now you need some cash but all your lines of credit are maxed out. With an emergency line like those offered by business-specific lenders or larger banks and credit unions, you'll have that extra funding available when it matters most.

Become eligible for more Loans

Have you ever considered getting a business loan, but worried that your credit score would disqualify you? If so, it might be time to consider getting a debt consolidation loan. A debt consolidation loan allows you to consolidate all of your consumer debts into one convenient monthly payment. Since it’s easier to keep track of just one payment than multiple payments, you may also notice an improvement in your credit score. If these two benefits sound appealing to you, then it’s time to consider applying for a business debt consolidation loan today.

Improve your Financial Situation

If you’re in debt and looking to get out, then you might be considering applying for a credit card debt consolidation loan. You have several different types of loans to choose from, but they all tend to give you more breathing room. The one thing that remains constant is that you need good credit in order to qualify. If your credit is less than stellar (or non-existent), don’t worry, as there are other ways you can dig yourself out of debt. But if your score is at least 620 (the minimum score considered good by most creditors) then getting a business line of credit may be your best bet—just make sure it's not at an outrageous interest rate!

Get Greater Flexibility

Small business loans can help you scale your business, but they’re not as flexible as other types of funding options. With business credit cards, small business loans, and lines of credit (LOC), you have more flexibility in repayment options. For example, while some small business loan programs require monthly payments or fixed payback amounts every month, with a line of credit or LOC you may have access to funds whenever your cash flow needs it—all you need is proof that an invoice was paid and that money was used on behalf of your company. The advantage? You don’t have to tie up all your capital in advance and repay all at once; you can scale up or down depending on how much revenue comes through each month.

Avoid Default and Late Fees

Paying your taxes on time is important, not just because you'll get hit with late fees if you don't, but because falling into arrears can hurt your business's credit score—which can make it difficult (or impossible) to get a small business loan later. To avoid default and late fees, set up an automatic payment plan; many states even offer options that will give you some flexibility in setting payments. And if you do have to pay fines, make sure it isn't impacting cash flow—consider paying out of pocket until your tax refund comes through. The sooner you pay what you owe, or at least take steps toward settling up, the sooner things will return to normal.

Have Peace of Mind

You know what’s stressful? Running a business. You know what makes it worse? Worrying about your money and debt. Dealing with debt is not just tough on you, it can also take its toll on your employees and your customers. Because if you don’t have a handle on all of that overhead, how can you hope to scale up and grow bigger? And if you can’t get ahead financially, how can you focus on your business plan instead of constantly worrying about bills? What you need is some financial relief—and here’s where getting a debt consolidation loan for your business comes in handy!