小生意英语

Small business debt consolidation is a debt management solution that can take two different forms. In one incarnation, consolidating debt for a small business can follow the same basic process used for individual debt consolidation. An alternative method involves going through a debt consolidation company that actually negotiates with creditors and secures more affordable payment plans that allow your business to retire the outstanding debt in a manner that is beneficial for both you and your creditors. Each approach has benefits and disadvantages that should be considered before initiating any type of small business debt consolidation. One of the most common ways of consolidate debt is to work with a lender to secure a loan that pays off all current financial obligations. In return, the lender establishes a repayment schedule that allows the debtor to make one simple monthly payment until the debt is retired. Often, the lender will even prepare and remit payments to each creditor on behalf of the business, thus ensuring that all current vendor accounts are paid in full. There are several advantages associated with this type of small business debt consolidation option. Because all current vendors are paid in full, those accounts are no longer accruing interest on an outstanding balance. Assuming that the consolidation loan carries a lower interest rate, this means the business will save money in the long run. Another benefit is that those vendor accounts with a zero balance serve as an excellent credit reference for the business, which may help to attract more customers. However, there are situations where pursuing this type of small business debt consolidation may not be the best approach. If the current vendor accounts carry either no interest or a very low interest rate, the business could end up paying more to retire those debts in the long run. In addition, there is the danger of the business running up new balances on those vendor accounts, creating additional hardship. If a company is already having trouble making timely payments to vendors, and chooses to keep using those accounts after paying off outstanding balances with the consolidation loan, the business may find itself in worse condition than ever in a matter of months. The second alternative with a small business debt consolidation involves working with a provider to manage business debt. In this scenario, the provider functions as a mediator between the business and its creditors. The provider seeks to secure repayment options that may stop the accrual of interest or rearrange payments so the small business can manage them more effectively. This approach can often buy the company some time to generate additional revenue either from seasonal growth or the expansion of the current products or services offered. At the same time, the debt consolidation company may be able to help the business develop a more realistic operating budget to help get through the temporarily lean times. As with the debt consolidation loan option, there are some potential drawbacks to this small business debt consolidation approach. The provider is likely to charge processing and account management fees that will add to the monthly debt obligation of the business. In some cases, those fees may effectively offset any breaks extended by creditors in terms of repayment of outstanding debt. When this is the case, going through a debt management or consolidation company really accomplishes nothing. Before going with this approach, make sure the provider can negotiate terms that save a substantial amount of revenue each month, or at least enough to offset provider fees and still make the effort worthwhile for your small business. There is no one right solution in every situation. When considering small business debt consolidation, weigh the options carefully. Take the time to project how a particular approach will impact the operation of the business next month, six months from now, and a year into the future. If the projections do not seem likely to produce the desired results, look for other ways to deal with the current debt load and find a solution that is in the best interests of the small business.