Chances are, many of us have been here - you’re growing rapidly as a small business, but perhaps a bank isn’t willing to lend to you yet due to your credit history, or the fact you haven’t been in business for very long. So, you take on some high-interest debt through credit cards or a merchant cash advance. Now, you’re faced with a crushing pile of debt - what can be done? Here’s some ways to lower your interest rate and lead to healthier credit for your business.
Why are you refinancing?
Clearly outline your financial goals for refinancing, such as reducing monthly payments, shortening the loan term, or accessing cash-out equity. This will help you choose the right loan product.
Is it the right time to refinance?
First, you have to see whether interest rates are lower than what you’re paying - try looking at multiple sources to get the lowest interest rate. A great time for refinancing is when you’ve got some big plans coming up for your business for which you’re going to need to be a little bit more liquid. This is a prime opportunity to consider refinancing that high-interest loan.
Is your business creditworthy?
The likelihood of being able to snag a good deal on your refinancing comes down to whether you’ve been able to build some good credit since taking on that loan. In the time you’re considering refinancing, prioritize building your credit.
Be sure you know what you’re paying for
Like with any loan, there’s going to be some more fees on top of your interest payments. Be aware of upfront costs like application fees, appraisal fees, and closing costs, as well as potential prepayment penalties on the existing loan. Here’s the key though: do the math to make sure the potential savings outweigh these expenses.
Refinance your business loan and get a marketing boost:
Honeycomb Credit offers refinancing for small businesses to help lower high interest rates. Plus, when you launch an investment offering with us, you get the added benefit of a marketing boost for your business and improved customer relationships through your community investing in you! To learn more about Honeycomb Credit, fill out the form below: