How To Get Business Financing And Reduce Your Monthly Payments
How To Get Business Financing
The questions is, is it possible or wise to add more personal debt before you take on new business financing? Can your total monthly payments go down after adding more new personal debt?
The answer is yes, in many cases it maybe your best option and here’s how you can make it work. First, you add the new personal debt and then you smartly eliminate that debt before you obtain your new business financing. What?
Think about it; the last thing you need is a new business bill payment on top of the bills you already have accumulated. Adding another loan payment on top of your other monthly expenses will most likely lead to more stress and frustration while you’re straining to keep up with it all.
What if instead first you went out and got yourself a new car. Fixed up or replaced things in your home that you had been putting off and perhaps even take a vacation all before obtaining your funding for your business capital? Would this be a smart thing to do? You bet it could.
Here’s how and why this may be good for you. The idea is to take all your current monthly expenses plus the ones you choose to add on before you make a new business loan, refinance, or line of credit.
Now you want to pay off all of those previous expenses while adding your new business funding. If it works out right, your new monthly payment for your new loan will be likely smaller than the combined payments of all your previous bills.
The best part is that now you won’t have to worry about very many unexpected bills. Since you would have already replaced or repaired many of these areas and paid them off with your new loan and you should still have money left over for working capital.
On top of that you won’t be adding your new loan payment on top of the bills you already have which will take a massive load off your shoulders while you are building your business.
I first used this technique when building my first tire and auto repair store. In my case, I had some equity in my house, so I refinanced the home and paid off two new cars for my wife and me, we took a vacation, and bought new furniture and appliances.
Not because we wanted these things, but because it was smarter to do it now since we knew these were things we would have to deal with in the next two years or so.
After we refinanced our home and paid for all the things I mentioned above, the new mortgage payment was less than the old payment total.
Not only was the mortgage lower, we no longer had any other bills to pay since we rolled all our previous bills into the refinance loan.
To top it off we made a killing on the much lower interest rates that were available at the time. I still had money left over in the bank, which I could use for a rainy day fund.
I then took out a business line of credit loan, which gave me access to $100,000. Because it was a line of credit, I did not have to pay a monthly payment on the whole $100,000, only the part of it that I used.
This plan gave me the flexibility to grow my business at a comfortable pace without being burdened by overtaxing expenses.
In short, I was able to lower my outgoing monthly expenses at home and in my business while at the same time increasing my access to business capital.
Of course, every situation is different. You may not own a house or have equity in it if you do own one. The point is if you do have current monthly expenses and it is possible to eliminate them as you are taking on your new business funding it may be a wise thing to do to give you the best chance of success in your business venture.
There are several ways to achieve a plan like this. But since I am not a financial advisor or attorney, I strongly suggest you discuss formulating a plan with professionals who specialize in how to get business financing.