HomeBusinessHow Consolidating Credit Card Debt Got Me Approved For a Business Loan

How Consolidating Credit Card Debt Got Me Approved For a Business Loan

No matter what type of business you plan on starting, you need money to cover the expenses. If you’re like me, chances are you don’t have the funds necessary to get things up and going. The next best option would be to borrow the funds from a lender. The only problem with that is, an unestablished business, a poor credit history, and thousands of dollars in credit card debt are red flags to financial institutions. They’re not willing to take the risk on a “dream” that may or may not manifest with an individual that may or may not repay the loan.

After getting rejected several different times (even once with a co-signer), I decided it was time to get to the root of the problem. If I was going to get a lender to take a chance on me, I had to prove that I was financially responsible. But how? There was no way I could pay off the thousands of dollars in credit card debt in a short timeframe. So, I decided to look into other options. 

Balance Transfer Credit Cards

Since most of my debt was from old credit cards, the first solution I considered was balance transfer options. These are credit cards that allow you to transfer balances from other accounts to one card. The promotional offer afforded cardholders the ability to repay the balances without having to worry about interest. This seemed like a good idea at first, but as I learned, more I realized that the promotion was only good for a year. If I didn’t repay the balance in full in 12 months, I would have a large balance with interest applied to it every month. 

Debt Management Agencies

Another option was to work with a debt management agency. These are financial experts that negotiate with creditors on your behalf to get you a more affordable repayment plan. Since they’re familiar with the world of consumer debt, they’re often able to negotiate better terms, including lower interest rates, reduced late fees, and settlement offers. 

Once they negotiate these terms for you, you’re required to pay them without fail until the balances reach zero. The only problem with this idea is that some of what you pay goes to the debt management agency for their services. Not to mention, if you fall behind on payments, collection efforts from your creditors will reconvene with little chance of them settling in the future. 

Debt Consolidation Loans

The final option I researched was debt consolidation loans. There were reviews about companies that helped people overcome everything from unemployment struggles to wage garnishments and more. This concept was similar to the balance transfer option but a lot more beneficial to the consumer. The interest rate was low and remained the same throughout the terms of your loan agreement, and the loan covered the outstanding credit card balance. I visited, contacted a representative, and got approved. 

The Path To Entrepreneurship

After researching and deciding on a method to get my credit card debt under control, I was able to focus on my dream to start a business. I knew it would be a while before I started seeing improvements in my credit score, so I focused my attention elsewhere. I created a business plan, did market research, worked with a mentor, and even took on a few side gigs to create a nest egg. Within 12 months of taking out the debt consolidation loan, my credit improved exponentially.  I went to my credit union and was able to get approved for a small business loan. 

Getting approved for a business loan for a new company isn’t easy. Banks are reluctant to lend funds to individuals with no proof as to whether the idea will be successful. Although this may be discouraging, you can change their opinion by improving your finances. By using a debt consolidation loan from Brice Capital, I was able to eliminate credit card debt faster, save more money, and eventually get the approval I needed to launch my business. 



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