4 Reasons To Refinance Your Small Business Debt
In the past, new businesses and startup companies often turned to conventional banking institutions when they needed to borrow money or refinance. However, several years ago, that changed when banks began to limit funding opportunities for small businesses. Today, many entrepreneurs still rely on credit cards or lines of credit when they need funding to resolve small business debt.
Although those forms of funding can fill short-term financing gaps, they can also lead to problems when businesses use them to deal with long-standing or recurring small business debt. Fortunately, according to FoxBusiness.com, it is now time for small businesses to think about replacing expensive short-term financing with more affordable alternatives.
Here are four good reasons why many small business find that it pays to refinance and consolidate short-term debt with longer-term business loans that have lower interest rates.
Streamline Your Finances
Refinancing and consolidating will do away with headaches caused by the need to manage numerous bills and remember multiple repayment dates and interest rates. Refinancing credit cards, merchant loans and other types of short-term financing to one longer-term business loan means you will ultimately pay just one bill at one rate. Plus, refinancing also makes it easier to calculate your budget for potential expenses in the future.
Reduce Rates to Save Resources
Whenever you refinance at a lower interest rate, you save money, both immediately and over time. As a result, you can sometimes use the money saved to pay off your business debt much sooner.
Help to Meet Growth Goals
Refinancing high-interest small business debt into business loans with low-interest rates can give you access to working capital that can be used to run your business operations. Investing the money back into the company can help your business thrive.
Positively Impact Credit Scores
Consolidating short-term business debt into one low-interest rate loan will reduce your credit use ratio, which will eventually improve your credit score. Plus, refinancing also makes it easier to make timely payments, which can also improve your credit score.
Taking the time to refinance your small business debt can have many lasting and far-reaching advantages. Since inquiring about eligibility often takes just moments and will not harm your credit score, it is a financing option that is worth investigating.