Whether you're running a business or managing a household, the word "debt" is enough to make your head spin and your blood pressure spike all on its own. Few things carry as many negative connotations and elevated stress levels as debt does. Whether it's paying back student loans or falling behind on your mortgage, the idea of owing more money than you can possibly have — and pay back that amount over not just years, but decades — is staggering and downright anxiety inducing.
But debt doesn't have to be a bad thing. Debt allows you to build credit, demonstrate your reliability as a borrower and take on some more expensive but necessary ventures in the short term: whether it's buying a house, leasing a car or opening your own small business. But if you feel like you're up to your eyeballs in debt, particularly the interest, it may be worth refinancing it with a lower-rate SBA Community Advantage Loan.
Here are two reasons why refinancing debt with an SBA loan may be worth your while:
- Enables you to focus on your priorities: "Growing your business. Refinance your short-term debt into a longer term loan with lower payments to improve your current cash flow," writes Small Business Trends. "With more working capital available month-to-month, things like payroll and slow account receivables don't have to feel like an existential threat. Bonus: paying off short-term creditors can help shield you from unnecessary collections lawsuits!"
- Repairs your credit score: Refinancing your debt with a business loan effectively means reducing your credit utilization ratio, i.e. the amount of money you owe on credit cards relative to your total available credit. Because this ratio can affect up to 30 percent of your credit score, reducing it through refinancing can give your score a strong shot in the arm in just a matter of months.
If you're an Ohio-based entrepreneur looking to expand your business or refinance your debt with an SBA loan, consult with Growth Capital Corp. today!