Three Ways To Consolidate Business Debt
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Cash flow may not be consistent while running a business. A lack of funds may lead to procuring a business loan to facilitate operations. If you take a few loans for business to run your company, you may have to take care of various monthly payments. However, when running a business, you want to focus on its products and operations, not on different due dates, interest rates, and balances. In this case, debt consolidation is the best option.
This article suggests three simple ways to consolidate your business debt.
How Does Business Debt Consolidation Work?Debt consolidation simply refers to applying for a new loan to pay all existing loans. A business debt consolidation loan allows you to streamline all your debts into one. Especially, as an MSME that requires constant funding, you can check your MSME loan details and consolidate them into one business loan.
Typically, business debt consolidation and personal loan consolidation work similarly. The inherent logic is to look for a loan with a lower interest rate than the current one. You must ensure that the consolidation loan covers all the outstanding debt.
What Are The Three Ways To Consolidate Business Debt?Three easy ways to reduce your business debt are:
1. Bank LoansBanks and credit unions are some of the most accessible options available. You must have a good credit history to qualify for a bank business loan. The criteria vary from one bank to another.
2. Personal LoansYou can take personal loans of up to INR 25 lakhs. If this covers your entire business debt, and at a low-interest rate, this can be a suitable way for you. It is one of the most flexible options for consolidating debt. It also gives flexible repayment terms and tenors.
3. Switching Business Credit Card Balance To Another LenderIf your business credit card lender is not offering high credit or levies a higher interest rate, you should consider switching providers. A credit card balance transfer means transferring your existing card balance to a new provider, keeping the balance amount the same but at an affordable interest rate and higher credit limit.
Apply For A Small Business Loan With IIFL FinanceIIFL Finance is a leading business loan provider. Since its inception three decades ago, it has helped several business owners have a hassle-free experience. IIFL Finance offers quick loans that are perfect for MSMEs with small financial requirements up to INR 30 lakh. You can check the MSME loan details at your nearest IIFL Finance branch or online.
We ensure you focus on your business operations more than financial hurdles. The entire process, from application to disbursement, is 100% online. Therefore, you do not need to visit any branch. The disbursals are quick and take 24-48 hours. You can fulfill various business needs and repay as per your preferred cycle.
Frequently Asked Questions
Q.1: Can you consolidate business debt?
Ans: Yes, many lenders allow you to consolidate your existing business debt with a new loan called the business debt consolidation loan. You can bundle multiple, smaller loans into one repayment schedule with business debt consolidation funds.
Q.2: Does debt qualification hurt the credit score?
Ans: Generally, debt consolidation does not hurt your credit score. Instead, it can use your business debt consolidation loan to pay your EMIs and manage your finances more effectively. You can use this consolidated debt to improve your credit score. However, it can hurt your credit score if you fail to make timely payments or extend your credit utilization.
Q.3: Are debt consolidations useful?
Ans: Debt consolidation is worth it if you have multiple debts and could benefit from a single loan with one repayment schedule at a less frequency.