Guide: Collecting loans for businesses

Advantages of collecting business loans

1. Simplified economy
   By accumulating loans, the company can move from handling multiple monthly payments to a single payment. This can make it easier to keep track of the company's debts and improve cash flow.
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2. Sometimes you can get lower interest rates - in the short term!
   If your company has multiple loans with different interest rates, it may be possible to lower the average rate by pooling them into a single loan. This can lead to lower overall interest costs over a certain period of time.
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3. Better liquidity - right now?
   By renegotiating the terms of a larger loan, the company can often extend the term, reducing monthly payments and freeing up capital that can be used in the business.

Cons to consider

1. Higher costs in the long run
   While the monthly payments may be lower, an extended loan term can mean you pay more in interest overall. It is important to look at the overall picture before deciding to collect loans.
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2. Difficulties in renegotiating
   If the company's credit rating has deteriorated since the first loans were taken, it may be difficult to get better terms for a new loan. This may lead to a less advantageous solution.
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3. Fees and Costs
   In some cases, there may be fees associated with redeeming existing loans or applying for new loans. These costs should be taken into account when considering collecting the business loans.

Many streams are small, eventually turning into a large stream.

An old classic proverb that is often mentioned in the context of economics. In this particular context, it is in a negative sense, as many small loans often come at a large cost.

Annuity loans a risk factor

It is very common for companies that offer to collect their loans do so through so-called annuity loans. This means that in the beginning you pay more interest and less installment (amortization). In this way, it will take longer to repay the loan and the total cost will therefore be higher.

Straight amortization is easy and often financially beneficial

In the case of a straight amortization, you constantly pay off the loan, you amortize the same amount all the time and thus get rid of the loan faster. Especially if the loan has a fixed monthly fee where you pay both the interest or the fee for the loan every month, while paying off the loan.

Financing investments

By drawing up a liquidity budget, you get a clear overview of your financial situation. This will help you determine which financing option is best for your investment — whether using your own funds, taking out a loan, or leasing equipment is most beneficial.

Collect your funding at Qred Bank

It can often be useful to gather your financing solutions in one place, such as with us at Qred Bank, where you can get both business loans for your slightly more short-term needs (up to 36 months) and a Qred VISA company credit card for your everyday purchases and expenses. Qred helps you with a personal, holistic solution for you and your company. Whether you have previous credits, we want to help you find the right type of financing.

You're welcome!