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Debt consolidation is the process of reducing multiple debts into a single repayment. This financial management strategy can not only help businesses experiencing financial hardship, but can accelerate growth for those looking to expand, too.

What Kind Of Debt Is Best To Consolidate?

Debt consolidation works best for those with multiple, unsecured debts. Examples include:

  • Credit Cards
  • Personal Loans
  • Student Loans/HECS Debt
  • Medical Bills

Unsecured debt is that which does not have any physical property attached to it to act as collateral for the loan, therefore it carries more risk for the lender; resulting in higher interest rates than secured loans. Debt consolidation loans generally offer slightly lower interest rates, meaning you or your business could see significant savings over the life of the loan.

How Can Debt Consolidation Help Businesses Experiencing Financial Hardship?

With a single loan to maintain, repayments are made significantly easier. By ridding the multiple, varying interest rates, payment dates and amounts, debt consolidation can reduce the stress of recovering from hardship; making the entire process more efficient, faster and simpler. In addition to this, it becomes clearer to gauge the business’s financial position, particularly in relation to the end of the loan term as there is a single end date in sight.

As well as ease of management, consolidating debt can improve your credit score. With simpler repayments, businesses are less likely to miss or make late payments. In turn, avoiding additional fees and penalties that could negatively impact their credit score.

How Can Debt Consolidation Fuel Business Growth?

As well as the likely lower interest rate, debt consolidation loans often have a longer term than individual, unsecured loans. This means businesses are not only saving money, but each repayment is likely to be significantly lower than the combined total of their individual debt repayments. This can drastically improve cash flow, allowing the business to invest the additional funds back into the business, fuelling growth.

The friendly team at Wisdom Business Consultants have a combined experience of 50 years and are ready to help you consolidate your debt. To get started, contact us here today!

References

Eloan. ‘The 5 Key Benefits of Debt Consolidation You Need to Know’, eloan, Online, [no date], https://www.eloan.com/blog/personal-finance/5-key-benefits-debt-consolidation (Accessed 4 July 2022)