Startups borrow money for numerous reasons. They see a business opportunity and go for it. However, they do not have the required capital to fund their small business most of the time. If you are in a similar situation, you can apply for loans from banks or other financial institutions. Though taking a debt seems a prudent move, sometimes things do not work out the way you think. Soon you realize that you have little or no profit when more cash goes out to pay your creditors. And this continues every month. Statistics show that 82 percent of businesses fail to survive due to the dearth of funds. Soon startups with cash flow problems are plagued with huge debts. Once this happens, you look for suitable options to pay off your dues. Now, debt consolidation is one solution to the problem. However, there is a problem. Not every debt consolidation companies are honest, and a lot depends on the type of lender you choose. It is true that the industry is endemic with fly-by-the-night consolidation firms taking undue advantage of startups plagued with multiple small loans. Not all are bad though, but some companies defraud businesses out of whatever money they have. However, relax and do not worry. Here are five tips to choose the best debt consolidation company for your startup:
1. Check the BBB Rating
Did you know that the Better Business Bureau (BBB) monitors the reputation and standing of businesses? Consumers publicly complain about companies who fail to keep their promise. The BBC produces a public record of the times a particular business displeases customers. Therefore, when you research on any debt consolidation agency, check its BBB rating. Simply write the business name to find its profile on the BBB platform. You will find past consumer grievances, including solutions provided if any. However, one or two complaints are perfectly fine with any firm, but if there are multiple ones, stay away from that debt consolidation agency. The best way to figure out a company’s credibility is by looking at the BBB rating. If you see a business with rating A or B, it means the company has fewer complaints and has resolved quickly and positively. However, if you find a debt consolidation provider has bad ratings, stay away.
2. Inquire about Charges
According to https://www.huffingtonpost.com, not every debt consolidation will make things easier for your startup. That is because if you want the best consolidation loan for your business, you should know the complete picture. Many times, a debt consolidation agency may not feel comfortable about sharing the fees and other charges that it includes in its services. More often, it will walk you through its products and the services. These lenders will not like you to focus on the fees for obvious reasons. It is your responsibility to inquire about the various charges as an informed customer. It will help you understand whether the lender will impose any hidden or additional charges later in the consolidation process. Even if the company cannot provide you with an accurate figure, request for an estimate. Your job is to include those fees to your consolidation loan. Therefore, stay updated to avoid being ripped off financially. Make sure you research on the internet and look for platforms such as nationaldebtreliefprograms.com.
3. Look for Third-party Reviews
Besides BBB ratings, you can go through other third-party reviews. Search review sites and check for any negative reviews about a debt consolidation agency. Look for platforms like Top Ten Reviews. It is one of the best places to begin your investigation. You can also check for Google reviews as well, and see whether the company you chose has wronged any customer or not. However, beware of fake reviews. Then, you can make out the difference between positive, negative, and fake consumer complaints. Read as many reviews as possible to figure out which is genuine and which fake. Do not fall prey to fake reviews.
4. Understand Debt Consolidation Well
Did you know that some consolidation companies glamorize their key products and services when pitching a prospective client?They do not want to show you all the details that they think are trivial. However, those minor aspects may become significant to you after signing the final agreement. Therefore, understand the ins-and-outs of the debt consolidation process. Many lenders will try to present a very rosy picture of consolidation just to make you sign the dotted line. Therefore, ask questions and do not hesitate to pester them with all the details of the consolidation process. It will not only let you know what you should expect but also help you figure out whether the lender has honest intentions or not.
5. Inquire about the Loan Terms and the Overall Deal
Ask how long the consolidation process will last. When will you become debt-free? Does it make sense to apply for debt consolidation given your financial situation? A reputed company will answer these questions and never hesitate to mention if your situation is not suitable for a business debt loan. An unscrupulous lender, on the contrary, will push you to take the loan even if it does not make sense. Therefore, tread carefully. Now, both short and long-term loans have some advantages. When you opt for long-term loans, you will pay lower monthly interest, but you may need to shell out more cash than usual. Short-term loans will attract higher payments, but you will become debt-free quickly.
When you are closer to the agreement when picking out the best debt consolidation company, ensure that you have real data to understand who is offering you the best deal. The essential aspects to consider are the loan term, monthly payments, and interest rate.
Always choose the lender that offers you a debt consolidation loan with reasonable terms and conditions. Declaring bankruptcy is not the solution to your problem. The better way to get out of debt is consolidation. Once you are debt-free, you can focus on new projects and business expansion. Therefore, make an informed decision.
Marvin Power is a freelance writer who has been writing for various blogs. He has previously covered an extensive range of topics in her posts, including business debt consolidation, Finance, and start-ups.