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5 Providers of Debt Consolidation Services and Loans for Businesses

5 Providers of Debt Consolidation Services and Loans for Businesses

Business and entrepreneurship in particular is among the riskiest endeavors you will ever take. Most of the time, you find that you have a unique business idea and a ready market. Things look up and to generate more revenue, you may choose to use your business credit card or take up a few loans just to finance and to build your business.

Unfortunately, there is an economic crisis, and you are unable to repay your loans and your sales drop. What do you do then? File for bankruptcy? Of course, this is the first idea that will cross your mind, but it may not be the best way out for you.

There is a better alternative – debt consolidation.

Debt consolidation refers to the putting together all your existing loans and credit card debts into one. Basically, you will take up a loan to repay your loan, now consolidated into one unit with a lower interest rate. The one big loan taken up pays off all your existing loans and credit debts and you will have one loan to service.

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Your business is eligible for debt consolidation if you have several creditors breathing on your accountant’s neck monthly and when you need a better system of repaying all your creditors.

The first step is to determine the amount you owe against the amount you have or what you can afford to repay monthly. Choose a plan[1] that will work well for your business. After that, you should find a company or a reliable debt consolidation service provider. There are various service providers, but the main ones include:

1. Online debt consolidation companies/peer-to-peer lenders

There are many of these nowadays and you may be stuck on which company to choose, especially when inexperienced. As a rule of thumb, research, review, and ask, even though online businesses have debt consolidation loans[2] made easy. Your financial counsellors, colleagues, or acquaintances will guide you in the right direction. Some of the leading online debt consolidation loan companies include:

  1. LendingClub: This is one of the nation’s biggest peer-to-peer lenders. If your business’ credit score is strong, then you will enjoy debt consolidation services at low interest rates from this online entity. Their rates are easy to understand and calculate because all the necessary items are described clearly. The LendingClub has been accredited and you can trust them to care for your business needs.
  2. SmartBiz: If you consider your business strong before and after going into debt, then you should consider talking to this company. Their rates are among the lowest for your loan if it is government backed. On the down side, their application process is intensive, and you will have to need a strong or excellent credit score.
  3. Funding Circle: If your established business is in financial crisis, with many debts and constant calls from your creditors, then you may consider contacting this company. You will need to have a good credit score and you will get your consolidation loan in about 10 days.
  4. Fundation: Running a big business, but in multiple debt? Talk to Fundation! Their interest rates are also low and they do not have many requirements, as long as your business has at least three employees and your business’ revenue averages at least 100,000USD.

2. Debt relief companies

There are many of these coming up and you will hardly miss a debt relief company within your vicinity. Once you have presented your financial information, the company will review your information, then advice you on the best debt relief or management strategy.

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If debt consolidation is more viable foryou, then you will receive information on the repayment period, fees, and the monthly repayment amount. Besides debt consolidation, there are a debt management plan, debt settlement and debt relief plans that could work for you in some instances.

3. Banks and credit unions

The first place to[3] seek financial advice from has to be your bank or your credit union. These are the places you went to for some or all your business financing. So, when you are in a financial crisis, you may have to visit your local bank or the credit union first.

Unfortunately, these institutions hardly offer debt consolidation services, but when they do, you will part with more interests. Banks and credit unions use the risk-based pricing model.

4. Credit counselling agencies

You won’t miss a few of these in your state. There are various not-for-profit credit counselling agencies that you can approach for debt consolidation services. As long as your business shows a good track record seen on your credit score, your chances of acquiring a loan to repay your debts will be provided.

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Always remember that there are charges associated with these services and you should read the terms and conditions of service keenly before signing.

5. Credit brokers

Whether you find them locally or online, these can be your best debt management[4] resource base. Their connections, financial knowledge, and debt management skills and resources will help you in finding the best debt consolidation loan lenders in the market.

These brokers do come in handy when you are unable to approach the credit lenders or the financial institutions directly. Since they are your intermediaries, you should include their charges and fees, whether one time or monthly, when you set up a repayment account with them.

In conclusion, your business being down financially could be a temporary thing and with the right backing, you can get back on top easily. While filing for bankruptcy crosses the minds of most business owners, it isn’t a highly recommended option and is often regarded the last option. Bankruptcy stays on your credit and financial history for at least 10 years, consolidation will not reflect.

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Once you have an approved debt consolidation plan and a loan, you should review your books to cut down costs, and find ways to save more rather than spend. That is the only way of increasing your revenue and decreasing credit.

Featured photo credit: debt consolidation via debt-consolidation-program.net

Reference

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Kevin Jones

Small Business Enthusiast & Advisor

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Last Updated on April 3, 2019

How to Nix Your Credit Card Debt in Less Than 3 Years

How to Nix Your Credit Card Debt in Less Than 3 Years

Debt is never a fun thing to be in. But, there are many actions that you can take that will help you rid yourself of the burden of debt once and for all.

By coming up with a set plan, eliminating your debt can feel much easier than constantly thinking about it.

This post will provide some tips on how you can do this to help you nix your credit card debt in less than 3 years.

Hint: there are ways that are easier than you think.

1. Consider Consolidating Multiple Credit Cards If Possible

This may not be applicable to you, but if you have multiple cards – it is something to consider. Keeping up with multiple bills is time consuming.

It will depend on the balance you have on each. Consolidate ones you can but do not do it to the point that you get too close to the maximum limit. Also, it is ideal to pick the card with the lower interest rate.

Consider if there are any fees or alternatively, rewards, with transferring a balance to another card. Watch out for fees. Note that some cards offer rewards for transferring a balance to them. This is extra cash that can help go towards paying off your debt.

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Having one or two cards can make nixing your debt much simpler than keeping up with the balance of a bunch of cards. Keeping track of paying the minimum towards a bunch of cards is time consuming. Spend the time to consolidate instead to make the overall process simpler going forward.

My tip: Have one main credit card. Have a second one that you use for necessities – such as groceries or gas – that offers rewards for those purchases (a lot of cards do) and set the second one on auto-pay. You should be able to pay off a smaller amount on auto-pay if it is a necessity. If you think you cannot, then you may need to cut down a lot on expenses.

Why do I suggest doing this? Having one thing set to auto-pay is one less thing to think about. One less thing to waste time on. Same idea with consolidating to one main card. Tracking down too many is a hassle.

2. Try to Pay the Full Balance You Spent Each Month at the Very Least

You need to pay off the amount you are spending each month when that bill comes in. This is the amount you spent THAT month.

Do not let the debt keep accruing while you work on paying any unpaid debt that has accrued. It will become a never-ending battle. Try as best as you can to be current on paying for each month’s expenses when that month’s bill comes out.

If this is a strain, consider why. You may need to cut expenses. Or you may need to consider other cards. Or look at where this money is going.

3. Pay Extra When You Can – Every Small Amount Counts

This cannot be emphasized enough. If you are looking at a lot of credit card debt, it can look daunting, but each extra amount that you can put towards the debt will really add up – no matter how small it is.

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It does not just reduce the principal amount that you have left to pay off, but it reduces the amount that is collecting interest. You will always save money with that reduced interest.

4. Create a Plan on How to Pay Extra

Back to the main point, having this plan is giving you one less thing to think about.

This plan should be a plan that works for you. If it does not work for you, your spending habits, and your views on debt, then it will not be an effective plan.

For instance, if a set plan of an extra $50 (or another amount that you know you can afford) works for you, then do that. Set that aside every month and pay that extra amount. Treat it like a bill. Choose an amount that works for you and pay it like clockwork as though it was a bill you had to pay each month.

Little amounts will not nix it entirely, but they will help tackle it and having a set plan can make it less of a chore. Creating a new plan of how much to put towards it each month is an unnecessary added stress.

5. Cut out Costs for Services You Do Not Use

If you are signed up for subscriptions that you do not use because of some free trial or for some other reason, cut it out. Your overall financial position will look better.

In turn, that will make cutting your credit card debt easier. Look at your statements to find these expenses. If you do not use them, you may forget you are paying some unnecessary amount each month. Cutting it out can really add up in savings that you can put towards other needed expenses.

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6. Get Aggressive About It

Consider these points:

Depending on the interest and the level of debt, you may need to give up a few indulgences. For example, instead of ordering delivery or going out to eat, cook at home. Everything adds up.

Other things may be more of a sacrifice. It may be a trip you wanted to go on, or a daily latte habit you’ve picked up. In these instances, consider how important it is to you and if it’s worth the sacrifice. And if it is a costly expense, think whether you can wait to indulge.

Cutting an extravagant expense can really help make a dent in your overall debt. Try not to add to debt when you are trying to pay it off. It will be a never-ending battle. Make it less of a battle with these tips and it will feel easier.

Bottom line: Do what you can to make this process easier for you. Implement steps that do this. It takes time now, but will help overall. Also, keep track of your spending and paying down of your debts. Which is the next point.

7. Reevaluate Your Progress at Set Intervals

Doing a regular check-in can help you see your efforts pay off or maybe indicate that you need to give this a bit more effort. If you check every 3-6 months, it will not feel so much like a chore or feel so daunting.

By doing this, you will be able to better understand your progress and perhaps readjust your plan. Bonus: if you see it pay off, it will feel great to do this check-in. You will get there.

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Finally (and most importantly)…

8. Keep Trying

Do not get discouraged. Pushing it off will make it worse. Just keep trying.

Once your debt becomes lower, each monthly payment will reduce the balance more. Why? You are paying less towards interest. It will be a snowball effect eventually and it will become much easier to manage. Just get to that point. And know once you do, it will feel easier and motivating.

Start Knocking out Your Debt Today

The best way to eliminate debt is to get started right away. Begin by implementing the above steps and watch your debt just melt away. Try out some of the above strategies and see what works best for you. Soon you’ll be on your way to a debt free life.

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Featured photo credit: Pexels via pexels.com

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