It comes a time in your business when you need some funding to keep your operations afloat. Fortunately, today you do not have to rely on traditional bank loans. You can get appropriate financing from alternative lenders. Nonetheless, you should know that you have to pay back the money you get. If you are not able to clear the money you borrowed, you should consider acquiring a debt consolidation loan. This blog will expound further on this subject to help you understand.
Definition Of A Debt Consolidation Loan
This type of funding is an ideal strategy to help you clear several loans with high-interest rates using one loan with a low-interest rate. This is where you acquire a new loan to help you clear other liabilities in your business, including consumer debts. Obtaining such financing is not complex, but you need to understand its steps.
Getting A Debt Consolidation Loan For Your Business
Confirm That You Qualify
Lenders check several factors to affirm that you qualify for this type of funding. This may include your credit rating, how well you have filed your personal and corporate taxes, how you intend to use the loan proceeds, and whether you have defaulted on a federal loan before.
Submit The Paperwork
After confirming that you qualify, you need to have the proper documentation ready because the lender will use it for a background check. Some of the papers you should have are the most recent balance sheet, Profit and Loss statement, equipment list, and three years of corporate and personal returns.
Documents Are Reviewed
The debt consolidation loan lender will review your documents to establish if you are eligible for the funding. The success of this step means your enterprise will get a prequalification letter, but that does not guarantee the funding. Formal due diligence follows, and if it is successful, you get a commitment letter. They will then ask you to provide documents of the loans you wish to retire.
If all the steps above go through successfully, you close the transaction by signing relevant documents. The lender will then forward the loan amount to an Escrow company, which will then disburse the amount to your business.
Debt consolidation financing is an appropriate option to clear some loans in your business. Luckily, Jasema Capital is here to help you with such funding and any other financial help you need.