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You started your home business a while back, kicking it off with a loan. You needed a shot of capital just to launch. Now, your home business is steadily growing. Once again, however, you need another shot of capital, but your old loan is not yet paid off. Plus, you’ve taken on some new debt as well. Should you consider refinancing?
Generally speaking, loan companies are willing to consolidate your older loan plus your additional debt at lower interest rates than you’re paying now. They are willing to be flexible with their terms and conditions because they understand that you are probably not under extreme pressure.
Is Refinancing Your Business Debt Difficult to Do?
Then, too, loan companies understand that a steadily growing business such as yours is less risky for them than a brand new business would be. The only problem is, you’ll need to convince the lender about yourself and your business. In other words, you’ll need to demonstrate to them that your business is not a credit risk. In so doing, you’re bound to end up with much better terms.
Demonstrate your credibility and the stability of your current business by providing the lender with the following:
Show Proof of Business Income
Show your lender that your business actually makes money and has been doing so for a while. Such proof will include your bank statement, tax returns, and any realistic projections you might have that show the amount of money you expect will flow into your business in the near future.
Develop a Proper Business Plan
You should already have a sound business plan. If you don’t, then draw one up now. Make sure you research it well and compile it in an organized way. Further, it should tell your lender about your company’s goals. In this way, you will reassure your lender that you’ll be able to repay the refinancing loan.
Provide Copies of Statements from Your Current Loan
Some lenders ask for copies of statements from your current business loan. Most will want at least six months worth of statements.
Have Good Credit
You’ll need good credit, both for your business and for yourself personally. Your lender might be lenient if you’ve been late with only a couple of payments here and there, however, especially if you have a good explanation about why you were late. Nonetheless, things will more likely go your way if your credit records are positive and you have a high FICO score.
How the Business Loan Refinancing Process Will Proceed
The business loan refinancing process is a simple and convenient procedure. Just follow the following four simple steps.
1. Make Your Decision About Refinancing Your Business
First, consider your decision from all angles. Can you afford to repay the loan? Will the infusion of capital allow you to expand your business? What are the terms of the loan you have been offered? Is there a prepayment penalty? Are there any hidden charges? Make sure you read all the fine print before you sign any loan papers.
2. Choose the Right Lender
Find the right lender not only by searching on the Internet but also by visiting some firms physically. Determine which one is most suitable for you. For example, you might decide that your best option would be to refinance home loan with rates from iSelect.
3. Apply for Refinancing
Now is the time to collect all the relevant documentation. Your lender will likely give you a list of the documents you’ll need to present to them.
4. Settle Your Old Loan
When your refinancing loan has been approved, you should begin to make arrangements to settle your old loan with this new one.
Don’t let your home business flounder in the shallows when you could push off from the bank and get back into the swim of things again. Consider refinancing your business debt with a new loan and take your business up to the next level.