Categories: Business

Unsecured And Secured Debt Consolidation Pertaining To Startups

Unsecured debt recoups startup loans in a more manageable way – A business dealing with substantial debt may not be eligible for unsecured loans or some consolidated solutions. But it might. It’s hard to know beforehand, and one of the best ways to get an assured perspective on a startup’s finances is working through professionals.

Professionals who regularly deal with disparate financial situations among startups get to the point where they know the “tools of the trade”, as the saying goes, and can truly help you get the most for the least. They’ll know which consolidation agencies can offer the most value for your specific situation, and which to avoid.

[pullquote]The thing about the credit industry in modernity is that it truly is an industry.[/pullquote] There are solutions for every business level, from the top-tier to the bottom-dollar. As well, there are going to be honest solutions and ones designed to profiteer off the finances of others at all levels. Navigating between them can be quite vexing.

With all this in mind, if you can find solutions which don’t require collateral on your business’ end, that’s to be recommended. In terms of seed money, “collateral” refers to assets of either a financial or tangible nature that can be used as debt security. This could be your business itself if you’re not careful.

An example of collateral would be a property which is used to make up the difference in a loan if some business can’t come up with the resources. Or proprietary data, or even a brand name. Sometimes collateral comes from areas where you may not have realized value could be sourced.

Contrasts

When it comes to secured vs unsecured debt consolidation programs, there are stark contrasts between the two; as DebtConsolidation.co points out, “unsecured loans don’t require any collateral…secured loans necessitate valuable property.”

While loans aren’t quite the same thing as loan consolidation, they are similar. Basically, a consolidated debt program gathers all payments you’re responsible for and converts them into one monthly payment that is much easier to manage.

As an example, say you’ve got a company car, a property, training, product, and legal debts that you pay monthly. Now, these exist on top of other things like infrastructural costs, employee insurance, and marketing. While individually, each of these has its own interest, together you can get an idea of what you really owe.

Sometimes you’ll be able to lower interest via consolidation, which is one of its chief advantages. When you’re looking at consolidated options, secured ones are going to be more likely if your credit is already on its way down, or if you’ve taken some substantial hits in the past. Unsecured solutions aren’t so restrictive.

Working The Numbers

The good news pertaining to all these things is that even if you have a mountain of debt, you can get out of it with relative speed. Consider a situation where a startup was responsible for $20k in debt. Now, this debt comes from multiple sources, at least four. Consolidated, instead of, say, 10% interest, the numbers might be knocked down to 5%.

At 5% interest compounded monthly, an additional $1,000 is added to the principal ($20k) as each month begins – this number increases as interest go unpaid. That means $1,000 is your absolute minimum payment to keep from accruing substantially greater debt with time. But it won’t knock down the principal any.

Managing such debt predicates paying around $2k monthly. Doing this, the loan will decrease until it’s gone in under 2 years. You’ll even be able to lower the size of your payment in later months, but this will extend the payoff period. At any rate, consolidation can save you time and money, and if you can get it unsecured, that’s advisable. – For more debt management information, click here!