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1. Back Your Business Loan with Collateral Pledging an asset as collateral for a business loan may seem intimidating. Unfortunately, reluctance to pledge assets can result in expensive financing alternatives like business loans with higher interest rates or worse, no access to credit. Small business owners can pledge assets like the company's accounts receivables, goodwill, equipment and inventory as collateral for a loan. Lenders only require commercial real estate, blanket liens or personal assets as collateral when the asset does not fully cover the business loan amount. In fact, pledging accounts receivables and inventory can shield the business owner from pledging any of their personal assets. 2. Consolidate Your Business Loans Apply for lines of credit with lower interest rates than the existing debt. Businesses over 18 months old have a better chance of accessing unsecured lines. Unsecured lines of credit are a much cheaper method of financing than conventional business loans. 3. Swap Business Loan Products Convert to a business loan with a floating interest rate loan from a fixed rate product when interest rates are falling. When interest rates bottom out, businesses should apply for fixed interest rate business loan products in case the Fed increases rates. Repeated Fed rate cuts (for at least three quarters) indicate that interest rates have bottomed out. Similarly, when the Fed stops raising the interest rates for two to three quarters, it means rates are on the way down and it may be an opportune time to apply for a floating interest rate business loan.  |
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