Business owners struggling with debt should consider a business loan consolidation for their stacked loans. Here's why. The Federal Reserve Bank of St. Louis showed that from the Fourth Quarter of 2014 to the Second Quarter of 2016, there has been a significant uptick in non-performing commercial loans, which signals further weakness in this sector. With many small businesses lacking needed financing resources , this means that more debt will have to be incurred, or stacked, one loan on top of another.
“Stacked” loans simply means securing an additional unsecured loan or a cash advance on top of any outstanding loans or advances that a business owner already has incurred. But a stack that grows too high eventually comes crashing down, as those who play the wooden block-stacking game "Jenga" know all too well. This situation is definitely not a game for a business owner. The stability of their business and their livelihood could be in jeaopardy because their lenders will want to take a hard look at their fiscal future.
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.
Eliminating these “stacked loans” makes sense. And the best way to do that is through a business loan consolidation. Here are four reasons why you should consider it:
A business loan consolidation can roll many monthly payments into one single monthly payment. Instead of having to pay five or six different loans that total $3,000 a month, a business loan consolidation could possibly decrease that monthly payment to $2,200 just by eliminating all the extra finance and interest charges on the multiple lines of business debt.
This consolidation can go a long way toward helping a business by providing liquidity, cash reserves or even addressing short- or long-term strategic goals that a company has always wanted to pursue. Best of all, the turnaround time for getting results can be very quick, and the effects quite remarkable.
Your credit is like your name: once it's tarnished, it is hard to restore. If your loans are stacked so high that it hampers your financial situation, then it's a safe bet that your credit score is in dire straits. Consolidating your business loans can definitely help improve your credit score. Not only will multiple lines of debt be paid off, but the creditworthiness of the borrower will also benefit.
Since the creditworthiness of the borrower has improved, potential lenders will not only extend credit in good times, they will also be comfortable extending it during bad times. This is especially true if the business owner has a good relationship with their lender and good credit overall, but just hit a rough patch. For business owners, having their affairs and their financing in order is a major long-term consideration for staying in business.
Relationships between the borrower and the lender matter. When it comes to getting a business loan consolidation, the more transparent a borrower can be about their financial situation, the better the lender will be able to help. All too often, struggling business owners are either overconfident, embarrassed or just too afraid to admit that they really need more help than they say.
A business loan consolidation can help lenders, too.
Many alternative lenders base their business model on finding loans and MCA contracts that have outstanding balances funded by traditional lenders. Then they will stack a new loan on top on the debt already in existence. Once word gets out that a business has received a loan, other lenders will let the borrower know that they may qualify for additional capital. It is no different from consumers who receive credit card offers and credit line increases even though they already have all the credit cards (or all the debt) they can handle.
As you can imagine, many prime lenders do not appreciate others trying to piggy-back on their underwriting prowess because it can make their loans more risky. But to promote responsible lending, many of the largest alternative lenders in the industry have added an "anti-stacking" provision into their loan agreements.
It is important to know that online resources can help small business borrowers find lending and financing, obtain new equipment and gain access to the general capital they need. The same is true for business loan consolidation.
A business loan consolidation can ease the debt burden. It can free up liquidity that small business owners can use to pursue all their goals. It lets them be more flexible so they can take advantage of any new opportunities that may arise.
Business owners want to keep moving forward. Having a healthy business lets them to truly enjoy why they got into business in the first place. Being weighed down with stacked loans is the last thing they need.