Refinancing Your Business Debt
Finding the right financing to run your small business has gotten much more difficult since the great recession of 2009, and as a result, many small businesses have taken on unhealthy debt loads, with repayment terms that are less advantageous than they might be. If your business is one that has taken out high interest loans since that recent recession, it may be to your advantage to refinance your business debt now to take advantage of lower interest rates, and to save money on expensive repayments, which you can then use as cash flow for your business.
Here are some reasons you might want to consider refinancing your business debt:
- Focus on business growth – if you refinance your short-term business debt into longer term loans with lower payments, your cash flow should improve dramatically. When you have more working capital, it’s much easier to meet the demands of payroll, and become less dependient from day to day on slow-paying customers. If your business savings are significant enough, you can even start paying off your debt faster.
- Save money on low interest rates – one of the most attractive things about refinancing your business debt is to take advantage of lower interest rates which are currently in effect. If your previous loans were arranged with high interest rates, you could save tremendously by refinancing, even if it’s just a percentage point or two less.
- Make your life easier – if you’ve found lately that your typical business day is consumed by juggling multiple bills and worrying about due dates, it can definitely be to your advantage to have a single bill to keep track of, and a single due date for your debt payment.
- Enhance your credit score – for many small businesses, credit scores receive an immediate boost when credit card debt is consolidated with short-term debt into a single loan payment. Often within just a couple months, you see an improvement in your credit score, because your credit utilization ratio has become much more favorable, and you have fewer creditors.