How to Go About Consolidating Debt
Perhaps no group has been hit harder by recessionary times and sluggish economies world-wide than those who own and operate small businesses
. As lay-offs and salary reductions are a part of everyday life, discretionary spending has become a fond memory for all but the highest income earners. Small business owners in the food, drink and entertainment areas as well as specialty stores or boutiques have seen customers vanish while leasing, insurance and transportation costs continue to climb. For many in small businesses, consolidating debt is a matter of survival.
There are a number of ways that a business owner can pursue debt management. In the case of very small businesses in small towns, phone calls to suppliers, landlords and lending institutions may result in extending payment due dates or temporarily reduce monthly outgo. When the business is in serious trouble, this is a band-aid, not a cure. A little bit of breathing room will allow the owner to map out an overall debt consolidation strategy.
Problem is though, that an owner who is struggling just to stay afloat is going to have very little time for the research and paperwork involved determining the best options when it comes to consolidating bills from a number of sources and lenders. Consolidation firms are sometimes perceived as simply there to help individuals get a handle on personal credit card debt. Helping owners to managing small business financial problems is a specialty area but fortunately, there are many firms and strategies from which to choose.
While the local bank or lending institution is always a good place to start and can offer sound advice, getting loans is not as simple as it used to be. All business owners should spend a few moments each day checking in on financial news that is related to their primary business. Money, Smart Money and other similar publications present financial information in easy to understand wording. All of these sources have online materials too.
There are two basic offering for small business accounts obligations. The first is the consolidation loan. Companies work with the client/owner and collect information such as: total amount of debt, total number of accounts, interest rates and repayment time periods. The consolidation firm bundles all of the debts together and shops them to lenders. The loan pays off all debts and the client makes monthly payments on the consolidation loan.
The second option is not a loan but instead the debt firm acts as go- between the owner and creditors. The goal is consolidating debt by trying to convince the businesses' creditors to restructure interest rates or even forgive some of the amount due. Regardless of which option a business owner may select, these services are not free. The business owner can greatly benefit from the professionals' expertise but must be willing to accept that the consolidation itself will add another business cost.
How to Go About Consolidating Debt
By: Fred Barnes
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