The Great Recession of 2008-2009 forced many small business owners to turn to alternative lending sources instead of traditional banks to fulfill their capital needs. These loans enabled these businesses to get off the ground but their cash flow was reduced. Now it's time for them to refinance those loans with a better deal.
Loans that come with high interest rates and onerous fees reduce cash flow and that hampers future growth. Refinancing those loans with better terms can alleviate the pressure on small business owners. They'll be able to repay their debt once their cash flow improves.
Your company needs financing, but research and due diligence puts your personal information at risk. The more options you consider, the more vulnerable you become. All lenders want to run your credit and access your personal information. Do not let them. Let Mayava find you the best rate available, safely and quickly without putting you and your company at risk.
Want to know if it's right for you? Here are four good reasons to refinance your business loan:
Sometimes, the borrower will spend months or even years making payments just on interest before even starting to pay down the principal. If this is the case for your business, you won't be getting out of debt anytime soon. Refinancing your loan with a lower interest rate is the solution. You can boost your cash flow while reducing how much of your payments go toward paying the interest each month.
Keep in mind that the fees involved with refinancing can put a serious burden on already limited resources. For a refinance to work, it’s not just about rates. The time factor matters too.
If you have a plan to keep the property over a period of time, then pursuing a refinance definitely makes sense. Especially if the property is projected to generate significant cash flow, refinancing can make sense over the long haul. This cash flow can not only make the refinance more attractive to a lender, it can also help the fiscal health of the business.
When was the last time you checked out your credit score? Before you refinance, take a look at your small business’ credit ranking because it can significantly influence your ability to refinance. Review your credit profile so you have a clear picture of your financial situation to determine whether you can even refinance.
You must try to resolve your credit issues before refinancing. To repair the damage, consolidate your revolving business debt such as your credit cards and dispute any fraudulent credit charges or errors, if any. Once you have a good credit profile, you're on your way.
The Small Business Administration (SBA) offers loans to entrepreneurs who may not qualify for traditional bank lending. But SBA financing isn't suitable for EVERY lending scenario. Make sure a business loan refinance reflects your present needs.
The SBA will allow refinancing when the proposed loan offers the borrower a significant advantage in interest rates and the overall payment amount is reduced by at least 10%. The SBA also charges 3% of the SBA-guaranteed portion for loans between $150,000 and $700,000, with higher fees for loans over the $700,000 threshold.
If your company qualifies for SBA financing, it still might not be logical to refinance your small business loan. While the SBA offers lower interest rates, it takes longer to process and approve an application than alternative lenders. In addition, debt may not be consolidated or refinanced on a credit card or other revolving lines of credit with SBA financing.
If your SBA loan no longer meets your financing needs, why not get started today to refinance your debt? The timing could be right.