A small business can get caught up in increasing levels of business debt over time, from a start-up loan, equipment loans and even a company credit card. Credit accounts with high interest, large monthly payments and excessive fees can impact the ability of a business owner to remain solvent. So, what’s an entrepreneur to do? Go to the U.S. Small Business Administration (SBA) and get a small business debt consolidation loan.
Business Debt Help From The SBA
Need business debt help? The SBA offers help with more than just start-up loans for new businesses. The guaranteed loans backed by the SBA are also available for operating capital, equipment purchases, expansion costs, and debt consolidation. In order to qualify for the SBA’s loan consolidation programs, a business must have debts that fall into the following categories:
- The debt must be in good standing, since the SBA will not consolidate past-due loans or credit accounts. Loans must be verified by the lender to ensure that all payments are up to date.
- Any loans to be refinanced, with the exception of credit card bills, must provide a substantial benefit to the company if they are refinanced. According to the SBA, this is defined as, “20 percent improvement to the company’s cash flow as measured by the changes in the debt service requirements between the existing and new debt structures of the debt being refinanced that remains in effect over the terms of the refinanced debt.”
Small Business Debt Consolidation Loans
Small business debt consolidation loans offer many benefits to entrepreneurs. For small business owners with excessive amounts of credit card balances and loans, these benefits are both tangible and intangible.
- A longer term results in reduced payments
- Reduced payments give the business a chance to use income to improve the business
- Lower interest rates reduce the long-term debt burden of the loan
- A single loan makes managing Accounts Payable a simpler process each month
Take Advantage of SBA Consolidation Programs
The debt consolidation help offered by the SBA is a valuable resource for small business owners. After qualifying for an SBA-backed consolidation loan, the business owner receives the loan from a private lender, and reaps the benefits for the lifetime of the business.