The business scenario has witnessed the wave of startups in the recent past. Right from path-breaking cab apps to grocery delivery, it seems that there is absolutely no limit to what the young entrepreneurs can create. However, startups are often funded by loans and if you are not managing your debt smartly right from the start, you could be in a financial mess along the line. When in financial turmoil, the best thing that could help your startup to get going is consolidation. Here are certain characteristic signs that demonstrate that your startup could be the right candidate for business debt consolidation.
Multiple Outstanding Loans
You must understand and appreciate the difference between debt refinancing and consolidation. Debt consolidation works when your business has accumulated multiple debts and you need to take out precisely one single new loan for getting out of those debts. Debt refinancing involves a single existing loan with high-interest rates and bad loan terms that is being replaced with another new loan having better terms and better interest rates. If your startup is currently having multiple outstanding debts, you may opt for debt consolidation for perfect solutions. In this context, you must make it a point to browse the debt consolidation reviews to learn what the appropriate choice is for you.
Multiple Interest Loans
If your present loans already are having low-interest rates, it is quite possible that business debt consolidation would not work for you. Generally speaking, if currently, you are having loans with very high-interest rates, debt consolidation would prove to be beneficial for your startup as debt consolidation could result in a relatively lower interest rate.
However, the interest rate you would be ultimately getting to pay would depend primarily on a few factors such as your startup’s annual revenue, your personal credit, and the time period your startup has been around.
Excellent Personal Credit Score
Even while looking for a business loan, your personal credit score is a key factor that your lender would be keeping in mind while processing your startup loans and would determine the interest rate accordingly. If you have an excellent credit score, you could qualify easily for a lower- interest consolidation loan. In this context, you must know that a credit score of 700+ is an outstanding one and you would certainly get loan choices for lowering interest rate options. Below 550 is regarded as a poor credit score. You are surely going to encounter huge problems while consolidating your debts. Surely you are not entitled to lower interest rates with such a poor credit score.
Period of Time you are in Business
If you have been around for a longer period of time, you would find it easier to get a lower interest rate on your debt consolidation loan. Startups that have been operating for relatively longer time periods would be having a long financial history. They could supply proof of success and profitability. This would be a key consideration for debt consolidation loan approval.
Keep the above-discussed factors in mind while seeking a consolidation loan for your startup. Before you start applying for debt consolidation, you must verify if one or more of the above signs are being demonstrated by your business.