Is Business Debt Consolidation Right for You?

August 23, 2017
April Brissette

Veterinarians Money Digest, August 2017, Volume 1, Issue 3

Planning for the future can be tough if you’re saddled with multiple debts, interest rates and payment schedules.

Do you ever feel overwhelmed by the monthly due dates, minimum payments and outstanding balances on your mortgage payments, business loans and business credit cards? You’re not alone. Many veterinarians are in a similar situation, one that is often compounded by veterinary school debt.

The reality is that it’s nearly impossible to operate a veterinary practice without taking on debt. First, there is the startup loan, which often comes with a relatively high interest rate due to the elevated risk in the lender’s eyes. It also costs money to run the day-to-day business; furnish it with technology, supplies and equipment; and pay your staff. Then there are the unexpected expenditures, such as replacing broken equipment or a staff member’s departure, which inevitably sneak up and for which plans have not been made.

If you’re a veterinarian with many business debt obligations, consolidation could benefit your practice in the long run. Debt consolidation allows you to combine multiple payments into one to make paying debt off easier, faster and more cost-effective.

To see if it’s a good option for you, take inventory of your current outstanding balances, interest rates and loan terms to get a full picture of your business’s debt.

Why Consolidate?

It can save you money in the long run.

Estimate how long it will take you to pay off each loan, and crunch the numbers to see how much interest you’ll end up paying. The numbers can be staggering when you factor in the compounded interest and see the total amount you ultimately will pay the lender.

Consolidation loans often offer a fixed interest rate and flexible terms, providing a predictable monthly payment that could cost you less per month and, perhaps, less interest overall. By combining all your debt into one payment, you might even pay off more in less time.

It can be less of a management hassle.

Managing multiple balances, interest rates and payment dates can be time-consuming, not to mention costly. Consolidation allows you to stop juggling multiple debts and instead make only one monthly payment to one lender. Most lenders also offer automatic payments, taking something off your plate and eliminating the risk of late-payment fees. Choose a payment date that is in line with when your practice account is typically at the height of its balance.

It makes it easier to forecast the future.

With more available cash and predictable payments, you could earmark the extra for ways to improve and add value to your practice and enhance the patient and employee experience. You might update your waiting room, upgrade computer software, provide new services, offer staff training or increase salaries. Another option is to create a fund to cover unanticipated events.

Consolidation Options

Two common consolidation options are credit cards and loans. Although a credit card may not be the ideal solution for wholesale debt consolidation, there are benefits to using one to consolidate accounts, especially if you can take advantage of a zero percent introductory APR period.

Debt consolidation loans offer an opportunity to pay off existing balances and potentially lower your interest rate. Depending on the structure of the financing agreement, a loan with a fixed rate can provide a single, fixed monthly payment and defined payoff period, allowing you to plan and budget more easily.

Worth the Effort

It can be challenging to plan for the future if you’re preoccupied by multiple debts with varying interest rates and out-of-sync payment schedules. When you consolidate your debt into a single payment, financial planning for your business becomes much clearer, allowing you to build the value of your veterinary practice.

April Brissette is the chief lending officer at Bankers Healthcare Group, the leading provider of financial solutions to health care professionals. For more information, contact her at abrissette@bhg-inc.com or visit bankershealthcaregroup.com.

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