business loans

Most of the businesses are constantly looking to get rid of the excess debt amounts. According to www.entrepreneur.com, out of the total businesses established, 50% fail as a result of less or no funding options. Chances are that the businesses have come across one of the most unique debt relief options, which is a debt consolidation loan. Business owners tend to conduct a deep study on the different debt relief options before they finalize the decision of sticking to a particular one. When they are educating themselves about debt consolidation, it is obvious that they are going to come across numerous myths as well. However, it is significant that as a business owner, you debunk these myths, so that you can consider if debt consolidation is the ideal solution for your business debts. Without debunking the top myths associated with a debt consolidation loan, it will be impossible for you to decide if it is perfect for your business.

Given below is a list of the myths that are associated with the business loans.

A debt consolidation business loans is a big scam

This is one of the most significant myths that the business owners are going to come across. It is one of the most legitimate avenues for clearing off the withstanding debts. However, it is crucial that you conduct a research on the counseling agency, which is offering this unique solution. You need to be aware of the predatory lenders who are popping up everywhere and are ready to take advantage of those businesses who are finding themselves in huge debt. It is your duty to look for the debt consolidation organizations that have a proper reputation and have been in function for a long time. Red flags should start going up if the organization that you have selected is asking for a huge sum of money as advance. You need to be careful when you are taking a decision.

A debt consolidation loan and a debt management plan is same

Debt consolidation loans and the debt management plans have a lot of similarities but they also have a few differences. Whenever you are consolidating your debt, you have to take a loan from traditional institutions like credit unions or bank. Ideally, these funds are used for clearing your loans and hence have a single payment at the end of each month.

However, debt management plans are known to work differently. No loans are involved. Your business is going to have one payment at the month end but the program is normally offered by the credit counseling agencies. Credit counselors are responsible for calculating a particular payment, which the business owner is capable of affording, and the counselor determines the time that will be taken for clearing the entire debt amount. The business owner or the borrower is going to send the money directly to the counseling agency, and the agency will be responsible for distributing the fund to all the creditors on basis of the amount that has been decided beforehand. A credit counseling agency is known to work with a creditor on a regular basis, and this is why the rates of interests are lower.

Debt settlement is considered to be a cheap manner of squaring the debts

Businesses often come across the billboards that are asking to settle the debts for fractions of the total money that they owe. It is true that it is definitely going to sound like one of the best deals; however, it is not going to be true. Most of the organizations are known to charge a substantial amount of fees, which is not something that you are going to prefer as a business owner. Moreover, chances are that the credit score is going to be scarred for the next 7 years. In comparison to debt settlement, debt consolidation is a much better option undoubtedly. You can check Nationaldebtrelief.com ratings to get assurance about a debt consolidation loan.

Debt consolidation loans help in saving money

There are different kinds of debt consolidation loans and you need to know about the best one so that your business can save money. However, this is going to take a lot of time as well as proper research. The choices that you have include straight debt consolidation loans from the credit unions or banks, home equity loans by using your home as collateral for getting a loan of a low-interest rate, or an unsecured loan.

The purpose of all the debt consolidation loans is to save you money, irrespective of the kind that you are choosing for your business. You need to keep in mind that your credit score plays a prominent and significant role in the rate of interest that you are going to receive. If a business owner is known to have a huge amount of debt, the credit score is going to suffer to a great extent, which means that you might have to pay a high rate of interest. This is why it is crucial that the business owners shop around before finalizing a decision. If the rate of interest that you are paying on a particular debt consolidation loan is not less than what you are paying on the bill of the credit card, debt management plans can be better options. It is up to you as to which one you are going to consider for your business.

Debt consolidation is responsible for more business debt

One of the most common refrains that the business owners hear is that a debt consolidation loan is not capable of fixing the problem at all. You might be able to wipe the business debts clean; however, if you keep taking loans constantly, it is obvious that you are going to end from where you have started. A debt management plan requires credit counseling, which helps in curbing the desire of taking loans. This can also be achieved with the help of debt consolidation.

Conclusion

Knowing each and every aspect that is associated with a debt consolidation loan should be known by a business owner before he decides to consolidate the business debts. In this manner, it is going to be easier for him to decide whether he wants to opt for a debt consolidation business loans or not.

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