For a businessman, much like any consumer, the most obvious way to manage and mitigate crushing debt is to resort to a consolidation loan.
This loan should be able to pay off most if not all of your existing debts and replace them with a single loan with a fixed interest rate and time period. This makes a lot of sense for a number of reasons, but mainly because you can then slash a number of monthly payments, and have more cash to invest into the rebuilding of your business.
Get Sound Counsel from a Good Source
Before you make a decision to go for debt settlement, you should learn as much as you can and seek advice as to whether it is the best option for you, preferably from a professional. Your accountant should be able to guide you through the same; otherwise, you could visit any business manager at a bank, or a professional debt relief counselor or wealth management advisor.
Are You Eligible for Consolidation?
Not every consumer is given a consolidation loan instantly. Whether you will be eligible to apply for the loan, would depend on how viable your business is at the moment, and whether you will be able to repay the loan in the future. If your business is doing well on paper, but is going through a rough patch when it comes to cash flow due to a failed expansion maybe, or some other legitimate reason, and has the ability to get back out there and be profitable again, then you should be able to secure the loan in no time. If, however, the business isn’t doing well, and it seems that you are neck-deep in debt and will not be able to turn profits, your request for the loan could be turned down.
Understand Your Debts
There are a number of debt consolidation options for you to salvage what is left of your business and get rid of your debts. The first thing you need to do is prepare a detailed list of all the debts the business has accumulated, from credit card statements to loan and bill statements. This allows you to wrap your head around the entire situation and take the next logical step, which is categorization. You need to organize these debts and create a prioritized list with the debts which need to be paid off sooner at the top. You have to decide whether you wish to consolidate the entire debt, or only a part of it.
Different Ways to Consolidate Debt
Every business situation is different, and hence you will need to evaluate which consolidation option is most suited for you. This can be done by digging up as much information you can about potential options and then comparing the fees, interest rates, longevity and other fine print offered by each. You could also browse through any reliable debt consolidation review. One option you do have is to obtain a loan from a lender at a Small Business Association. You should resort to these if they offer lower rates than what you are paying, and extends over a shorter period than the debts themselves. Longer periods mean more payment, irrespective of interest rates. Keep that in mind.
The other option you have is to get a small business loan from a commercial or a private lender. You have to find a trustworthy lender who is willing to invest in you and trusts you to pay him back.
Counseling is a Good Idea
The most reliable way out of debt is to actually get an idea of what to do in the present and the near future from a professional debt relief company. Make sure that the firm has dealt with similar cases before and helped several citizens and businessmen out of debt by chalking out a concise plan to pay the debts off. They should be ready to assign you a counselor or agent who would put the plan into effect. These services are probably worth a fee, but certainly worth every penny.
Author Bio: Jeremy Mortensen is a financial consultant and debt advisor who is working in the private sector. He also posts a new legislative update or a debt consolidation review in his blog every once in a while.