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business loans

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When Should You Consider Refinancing Business Debt?

When you run a bustling small business, even minor expenses and debts can add up fast. Whether you took out a loan to get started or found yourself in debt because of some unexpected hurdles, there’s a good chance that refinancing your business debt might be the best answer.

To build a strong financial foundation, you want to ensure that you’re taking the necessary steps to protect your cash flow and grow your business. Refinancing can help you with this—keep reading to find out how.

What You Need to Know About Refinancing Business Debt

When Is Refinancing a Good Option?

Before answering this question, let’s examine what refinancing is.

Refinancing is when a business takes out another loan with the intention of paying off its existing debt with the new loan. This reduces the monthly payments on the loan by extending the term of the loan or lowering monthly payments altogether.

Refinancing allows you to get a lower interest rate, pay off your loan sooner, or take advantage of other attractive features of the new small business loan. This makes it a great way for businesses to expand their operations and leverage new opportunities without having to take on more debt or spend more money long term on interest payments. But when should you consider refinancing?

Financial Difficulties

Most companies usually decide to refinance or restructure their debt when they’re in a financially distressing situation and cannot make their monthly payments on time. In this instance, a chance to lower the interest rate or extend their loan term might help them make their payments on time without going under.

Favorable Market Conditions

However, financial decisions are not the only reason businesses refinance their loans. Businesses might also choose to restructure their debt because of improved credit ratings or decreasing interest rates. Taking advantage of favorable market conditions allows them to free up cash for other business operations and investment opportunities.

Why You Should Refinance

Have you ever wondered if it is a good idea to refinance some of your business debt? Maybe you have heard that you should refinance your business debt but don’t know why or are confused about if it really is the best option for you. It’s easy to get mixed messages about business debt, and this makes it hard to know what to do. Keep reading to find out when it makes the most sense to refinance your business debt.

To Escape Higher Interest Rates

Refinancing is a great way to escape higher interest rates and save money on your mortgage. By refinancing, you can lock in a lower interest rate and monthly payment, which can help you free up some extra cash each month for more business growth and innovation.

Many businesses in their early stages take on high-cost debt with astronomical interest rates, or predatory loans. Without refinancing, predatory loans cause you to be paying off your loans for longer than planned, which can redirect funds from important business ventures. Refinancing offers you an out, lowering your interest rates, allowing you to pay off the loan faster, and resulting in more savings.

To Elevate Your Credit Score

Refinancing can help you improve your business credit score in a number of ways. First, it can help elevate your credit utilization ratio, which is the amount of credit you’re using compared to the amount of credit you have available. If you’re using a lot of your available credit, it can hurt your credit score. Refinancing can help by giving you more available credit and bringing your utilization ratio down.

In addition, it can help improve your payment history. If you have a history of late or missed payments, it can drag your score down. Refinancing can give you a chance to make all of your payments on time and fix your payment history.

Finally, refinancing can help you get rid of high-interest debt. If you have debt with a high-interest rate, it can cost you a lot of money in the long run. Refinancing can potentially get rid of that debt and help save money on interest.

The Revenue Generation Has Slowed Down

When a business is not generating as much revenue as it once was, refinancing can be a helpful option since it helps lower the monthly payments. This can be useful when revenue has decreased as it provides businesses with access to the extra funds they need to keep operating.

Change in Payment Frequency

By refinancing, you can change the payment frequency to one that better suits your needs. It can help you pay off your debt faster or slower, providing you with some much-needed breathing room by giving you a lower monthly payment. This can help you better manage your finances and make your payments more affordable.

Switch to More Favorable Payment Terms

Since refinancing involves taking out a new loan to pay off an existing one, you can fix your own payment dates or months based on your convenience. This will help you pay the debt at an improved rate as per your preference and business needs.

Who Should Consider Refinancing Their Business Loans?

Any business that is struggling financially can benefit from refinancing. However, you will generally have better results from refinancing if your main problem is a low credit score. If you’re struggling due to other factors such as high interest rates or lack of funds, refinancing might not really solve the problem, depending on the situation.

If you own a small business, you may have more than one type of business debt. A good credit score and cash flow is something everyone strives for while running a business, but sometimes debt can build up, and you might feel like you have nowhere else to turn. In these instances, you can lower your interest rates and gain more flexible terms if you opt to refinance.

Refinancing can help lower the financial burden on your business in some cases. Lendistry strives to be a source of financial education for small business owners and offers a wide range of financial programs to help businesses grow and serve their communities.

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How to Grow Your Food Services Business Using Small Business Loans

Is your food truck, restaurant, catering company, or grocery store doing well this season? Are you thinking of expanding your business?

In this scenario, small business loans might help you buy equipment, hire personnel, expand your business, or pay your bills during a sluggish period. Read on to know about expanding your foodservice business using small business loans.

Listed here are some of the ways in which you should utilize your small business loans to help your food services business develop.

Purchase Inventory

Small business loans allow you to purchase supplies as needed, so you won’t have to worry about running out of inventory. This way, you’ll also have better control over your operations and can fulfill your customer’s needs smoothly.

Hire Employees

If you’re taking a loan to expand your business, you’ll need to ensure you have a staff that can handle the increased workload. Hiring competent employees with prior catering expertise will enable you to serve more customers and deliver the most satisfactory service possible. Furthermore, you might use the loan to train your personnel in areas like customer service, event planning, and food and beverage management.

Prioritize Technology

Although you have a talented team, it’s worth thinking about how technology may make your processes more efficient and easy. You can use your loan to pay for automated technology, like inventory management, cloud computing, and scheduling software.

These technologies will enable you or your team of talented professionals to manage fewer administrative activities, allowing you to focus on more important commitments. Additionally, tech solutions like delivery and tracking apps played a pivotal role in helping businesses offer takeout and curbside pickup options to customers.

Invest in a Marketing Strategy

Even if you have the means to cater more events, your food business will not develop unless you attract new customers. To accomplish so, you’ll have to invest in marketing tactics that will assist you in locating and promoting your ideal customers. You can get a loan to pay for marketing materials or outsource projects to a professional agency.

Purchase or Lease a Vehicle

Before buying a van, consider whether you need numerous vans, built-in storage for food trays, or refrigeration for traveling with prepared food.

Purchasing a new vehicle with a business loan is a wise investment for your catering company. Having a dependable vehicle with the capacity and features you require means you’ll be less likely to be late for events and to arrive with food in perfect condition.

Expand into a Commercial Space

A commercial kitchen will allow you to prepare for more significant events, purchase larger culinary equipment, and store more supplies.

Furthermore, having a physical address for your company can help potential customers see you as a legitimate business. This makes them more likely to hire your services.

 

Lendistry’s diverse financial solutions provide small food services businesses with the affordable capital they require to expand and serve their communities. If you’d like to learn more, call them at 888-594-7270 or contact them online!

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5 Ways to Expand Your Business

When it comes to running a business, one of your main goals is to maximize your profits. One way to do that is to expand your business. However, funds are needed to take your business to the next level of growth.

That’s where an acquisition loan comes into play. With an acquisition loan, several business owners have been able to expand their companies. But aside from that, there are many other ways you can further develop and grow your business.

We’ve put together a list of five ways you can grow your business.

1.  Research the Competition

Whatever your business may be, the marketplace tends to be a highly competitive space with multiple vendors selling similar products or services. One way to stay ahead of the competition is to do thorough research on what other businesses have to offer and the strategies they implement and embrace new concepts that could work for your business.

2.  Implement a Loyalty Program

Implementing loyalty programs can help increase sales and help you upscale your business. Research shows that acquiring new customers tends to be more expensive than selling to an existing customer.

However, with a customer loyalty program, businesses can retain existing customers while also attracting new leads who can contribute to your business’s growth. A customer loyalty program can be designed, developed, and implemented to work with both existing and new customers.

3.  Identify Opportunities That Complement the Business

Another way to expand your company is to start diversifying your offers and selling products that compliment your existing business.

Essentially, by tackling your consumer base’s pain points and identifying the possibilities, you can take advantage of the opportunities within your niche and further grow your business.

4.  Consider Entering a Franchise Model

If your business is booming and aims to expand, entering into a franchise model can help. It can make a difference for business owners looking for rapid growth and expansion.

5.  Take over Another Business with an Acquisition Loan

Another way to expand your business is to acquire another company that complements your business with an acquisition loan. This type of loan also allows you to purchase assets.

Acquisition loans are typically given out to business owners looking to expand but don’t have the capital. However, before sanctioning the loan, the lender tends to take into account several factors, including the business owner’s capability to successfully run their expanded business and pay back the loan.

There are different types of acquisition loans, and in order to be eligible for one, your business should be operational for a specific time period.

 

If you’re considering expanding your business and are looking to acquire an acquisition loan, get in touch with Lendistry. They offer a wide range of comprehensive and affordable financial services.