There comes a time in your business when you have debts with pressing timelines and must be paid as soon as possible. If you are low on finances at such times, the best option you have is acquiring a debt consolidation loan. But, how do you know which loan to take for your business and which lender to borrow from? This article will help you make an informed decision on that.
Types of Debt Consolidation Loans
Different lending options suit different small business owners’ needs. These include;
Small Business Administration liaises with financial institutions to ensure small business owners acquire funding for different operations, such as purchasing new equipment or consolidating their debts. Most of these loans are supported by the federal government. That is why lenders are always willing to finance small businesses. Moreover, they have lower upfront costs, and in most cases, you will not be required to give any collateral. The two most common SBA loans are 504 and 7(a).
You have been saving and working with your local bank for a while now. It would be wise if you turned in the time of need for a debt consolidation loan. However, you must be ready to tackle the complicated process of acquiring a bank loan. A recession from 2008 to 2009 saw big banks become more stringent on their underwriting parameters and pay less attention to small businesses. Banks now focus more on established businesses and business owners with a high credit score.
If you cannot access a debt consolidation loan from a financial institution, you have alternative lenders, also known as online lenders, at your disposal. Such creditors have increased in number since the Great Recession. Such lenders include crowdfunding platforms, marketplaces, and direct private lenders. Their loans may have higher interest rates, but their underwriting criteria are less stringent than those for SBA or bank loans.
The three sources discussed above are the best for acquiring a debt consolidation loan for small business owners. Contact JHF Capital today to get more details about getting funds to settle your small business loans and get the best digital marketing solutions.