Businesses commonly use loans to help them with operations, growth, and goals. Whether that be to purchase more inventory, invest in equipment, or acquire assets, loans are a necessary tool. Lending opportunities can prove to be beneficial but steady cash flow is necessary to help manage these debts. Businesses commonly find themselves facing unexpected obstacles such as inflation, rising wages, and changes in operating costs. When these factors affect the stream of cash flow, those debts begin to become hard to manage which can result in more debts to continue operating. Multiple debts can be difficult for businesses to manage due to different interest rates, due dates, and payment amounts.Debt consolidation is often seen as a solution to these difficulties as it can help businesses get back on track. Debt consolidation loans are types of loans that business owners can use to pay off existing debts. This allows business owners to combine all of their existing debts into one lump sum resulting in one interest rate and one payment as opposed to managing multiple. Debt consolidation loans are common and are available for businesses of all sizes and structures.Here are the 4 benefits of consolidating your debts:

1. Manageable Payments

Managing multiple payments can be difficult as the payment amounts, interest rates, and due dates can be all different. Designating someone to manage these tasks can also become a full-time responsibility. Cash flow can become an issue for managing different payments schedules due to the fluctuations businesses commonly deal with. By having only one loan and one payment, overseeing debt can become more manageable and allow cash flow to be less strenuous by making late payments less likely. 

2. Better Interest Rates

Having multiple loans with different interest rates can result in additional costs. Loans with higher interest rates can result in larger payment amounts and higher principal balances. By paying on loans with different rates, managing your debt balances can become difficult. By consolidating debts into a loan with a better interest rate, you can benefit from lower payments. You can also save money in the long run by paying less interest over the amount borrowed after the loan is paid off. 

3. Consistent Cash Flow

Cash flow is important for businesses to have access to. It helps maintain business operations by keeping cash on hand to pay for operating expenses, payroll, supplies, and debts. However, managing multiple loan payments can make managing cash flow difficult because it creates more tasks for bookkeeping. Consolidating multiple debts into one loan payment can help reduce cash outflow because you’re managing one scheduled payment based on one amount. This keeps more money in your business which allows you to focus on the other expenses mentioned that require cash flow as well. Consistent cash flow also creates more growth opportunities as liquid assets can be allocated towards other needs of the business.

4. Improved Credit

Consistent payment history is an important factor in regard to credit scores. Late payments and missed payments can result in severe penalties. Having multiple loans can make it difficult to stay consistent but managing a single loan can help you focus on managing your payments and building your history. As a result, your credit score can greatly improve which can benefit you in the long run if you need to apply for another loan in the future. An improved credit score can help improve your odds for future loan inquiries and attain lower interest rates.

If you find yourself feeling overwhelmed from having to manage multiple payments, consider business debt consolidation. It can be beneficial for your business by combining all of your debts into one loan. You can enjoy the peace of mind of having lower interest rates, consistent cash flow, and simplified payments. Wing Lake Solutions takes pride in assisting businesses currently dealing with debt issues by providing options. Our unique approach can help you take back control of your business and drive your own success.For more information contact us at: (248) 243-4350