Running a small business can be extremely rewarding, but it also comes with its fair share of challenges. One common issue many business owners face is juggling multiple business loans and debts. From equipment financing and lines of credit to credit cards and vendor accounts, it’s not uncommon for a business to have obligations spread across several different lenders.
There are several advantages to working with a non-bank lender for a debt consolidation loan, including:
Because they aren’t bogged down by the same bureaucracy as banks, non-bank lenders can often fund loans much faster. You may be able to get approved and receive funds in as little as a few days or weeks. This enables you to consolidate high-interest debts quickly before they spiral out of control.
Whereas banks tend to impose strict criteria, non-bank lenders take a more holistic approach to creditworthiness. They may still review your business and personal credit scores, but will also consider factors like your experience, business viability, and collateral.
This flexible underwriting makes it possible to get approved even if you don’t have perfect credit or meet every typical qualification.
By consolidating multiple high-rate debts into one loan, you may be able to secure a significantly lower interest rate than you’re currently paying. This reduces the total interest fees you pay over the loan term.
Online lenders can often offer lower rates than traditional banks, saving you even more money each month. Be sure to compare interest rates from multiple lenders.
Non-bank lenders may also provide more flexible repayment terms than your current debts allow. Stretching out your repayment period lowers your monthly payment and improves cash flow.
Just be sure the longer term doesn’t negate interest rate savings in the long run. Avoid extending the repayment period just to get lower payments.
Online non-bank lenders provide the convenience of getting funded quickly through technology. However, many also assign you a dedicated loan specialist to guide you through the process.
This provides the personalized service of a community bank with the speed and efficiency of an online lender. Look for a lender that provides individual support.
Most types of business debt can be consolidated, including:
As long as the debt is in your business name and used for business purposes, it can typically be consolidated. The main limitation is that mortgage and auto loans usually cannot be consolidated.
When applying for a non-bank consolidation loan, lenders will review certain documents to assess your eligibility. Be prepared to provide:
Providing recent, accurate financial documentation is key. Demonstrating consistent revenue and the ability to repay the loan makes approval more likely.
Loan amounts for business debt consolidation can range from about $5,000 up to $500,000 or more. The amount you qualify for will depend on factors like:
Work with a loan officer to determine the optimal loan amount based on your goals and financial circumstances. Avoid borrowing more than you need.
Applying for a non-bank consolidation loan is relatively straightforward. Here are the basic steps:
From application to funding, the process can be completed in as little as a few days for the fastest non-bank lenders.
While consolidating business debt has many benefits, there are also some potential drawbacks to keep in mind:
As with any major financing decision, be sure to think through both the positives and negatives before committing to a consolidation loan.
If consolidation isn’t the right solution for your situation, some alternatives to consider include:
Assessing all your options will help you find the right debt relief strategy for your business.
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