Sometimes the sum of the parts can be greater.
In a recent survey of small businesses, a threat to financial health exacerbated by the impacts from the pandemic was the continued burden that short-term expensive credit has on cash flows. That in turn is prohibiting businesses from scaling up quickly.
Consolidating existing creditors into one loan and creating a reduced monthly payment makes sense – and it can also have the potential to release capital and generate positive cash flow for developing new income streams.
Our client has a good credit rating and a ‘fair’ trading record for 5 years.
To fund development, they had amassed 8 major loans and leases – with total Indebtedness £185,000 and total monthly payments of £10,999.
We were able to halve the monthly payment and release capital!
We obtained a 5-year unsecured facility with a repayment of £4,800 at 7%pa.
They settled the creditors AND provided an additional £65,000 working capital surplus.
Debt consolidation over 5 years unsecured, or longer when secured by property (business or personal), can reduce the monthly burden AND the interest rate too.
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