As the ongoing coronavirus pandemic continues to affect businesses of all nature and sizes, the time is ripe for consideration to be given to debt consolidation, according to Dino Hinds, Chairman of the Micro Financing Group.
Hinds said, “Now is a good time for entrepreneurs and small business owners to consider debt consolidation. Renegotiating the terms of your loans can result in reduced monthly rates, longer repayment times and lower interest rates to assist your business during this challenging time,”
He was speaking at a recent C&W Business Jamaica small business webinar titled, “Strategies to Sustain Your Business in 2020 and Beyond”.
Hinds also encouraged business owners to consider all the funding opportunities before engaging a lending institution. “Times have changed. Small businesses are now able to access equity and mezzanine [a hybrid of debt and equity financing] to finance their business. Debt is no longer the only option,” he said.
He also implored businesses not to take on debt solely on the basis of available. “Debt is not a bad thing [but] it must be managed wisely. Also, if possible, only assume debt to acquire assets which will increase the earning power of your business.”
Also participating in the seminar was Hilary Reid, partner at Myers, Fletcher & Gordon, Attorneys-at-Law who stressed the importance of business owners doing research before committing to a lender.
Reid said, “It is important to conduct the research and be fully prepared before a meeting with your bank. Review all your collateral, obtain your credit report, have certified copies of your business registration certificate and TRN. Also, be clear on what you intend to do with the loan and how much you require. This will put you in a better negotiating position.”
She continued, “Small business owners must carefully read all financial documents and understand their obligations as a borrower, and the impact that it may have on their business before signing. For example, you must be clear on what will trigger the lender to enforce against you in the event of a default when accepting a new business loan or consolidating debt and consider how the loan will affect your financial position going forward.”
Further, she said the desire to get cash transactions is strong among small businesses, particularly those without an accountant, but these must be done with consideration that it may limit future loan opportunities. “Lending institutions often use cash flow to decide whether a business can repay a loan and may even offer you a line of credit without you making the request.”
Other webinar presenters included Sandra Samuels, CEO of Totally Male; Metry Seaga, past president of the Jamaica Manufacturers Association and Romain Lovindeer, Solutions Architect – C&W Business Jamaica.