MonthJanuary 2019

Combining Loans for Debt Consolidation









How can loan consolidation help to organize loans?

How can loan consolidation help to organize loans?




Loans are now more convenient, for example, online and, as a result, they have become more common among young users. Various quick-ups and other small loans are familiar to many and include users of all ages. Almost everybody already has credit cards, and even though this is not always thought of as a traditional loan, it is still borrowed wealth that has to be paid off. Because the economic situation may change very quickly and you want a certain level of security in your everyday life, you can get a lot of loans for one person. If there are many things going on for different providers, it may be timely to think about combining the loans. The combination of loans is therefore one of the loans that pays off other debts and will concentrate on paying only the installments of this somewhat larger loan. It is also advisable to combine loans if you have been in a relationship where both have separate loans under their own names. Taking one single loan can bring unexpected benefits and save considerable sums of money. Below you will find the biggest benefits of combining loans:

All payments at once



 Debt consolidation is first and foremost due to the fact that all loan payments are transferred once, ie there is no need to remember separate loans and their due dates. The more bills and dates there are, the greater the chance of forgetting one of them, so especially low interest rates will rise significantly. When choosing a combination of loans , one can only keep in mind a certain day and handle the payment so far.

New payment plan and terms



Once the original loans have been taken, their payment plan has been made appropriate to the situation. As everyone knows, situations can change quickly and, as a result, combining loans gives you a new payment plan that is right up to the point at which you merge. At the same time, we can compare different options for the loan package, which means that interest rates and expenses can be influenced again. Finding the cheapest package is easy with the help of a loan comparison, which of course contains information on what type of loan is being sought. When loans are combined, you also need to think carefully about the amounts you want to pay back. In order to make sure that these payments are overcome, it is advisable to give yourself realistic goals in paying the loan, because failure means either arriving at a late payment or even taking a new loan, which of course is not worthwhile in this situation. In any case, the monthly installments of a combined loan are in any case smaller than what they would be if the loans were separate.

Interest and expenses

Interest and expenses





The combination of loans means that, for example, account management costs are no longer paid separately for each loan, but only for this new loan. This alone brings clear savings, especially when it comes to longer-term loans. However, combining consumer credit also affects interest rates, as the applicant has the opportunity to choose the best loan package for him and when there are plenty of bidders in the industry, one can be sure that an affordable option is available. This allows you to save hundreds of euros on the easy way, that is, combine loans – save money!

Debt consolidation thus offers many new opportunities, ranging from new terms and providers to payment plans, interest rates and other expenses. Since the background of earlier loans is usually not examined with particular care and, for example, their terms do not affect the new loan, the loan applicant has almost free hands to decide what is the best way to combine loans and where to choose a new loan provider. Of course, the most convenient way is through the Internet, as there is no need for visits to offices or others. Before combining loans, however, it is advisable to examine the terms of the existing loans, in particular what is said about early repayment of the loan. Some of the borrowers want some compensation because the borrower is not paying any interest and expenses when the loan is suddenly fully repaid. With all loans, this is not necessarily the case, so the terms of your loans must be known so that you will not be able to come up with uncomfortable surprises later.

When you know how much the loan repayment will cost and also consider any extra costs, you can start calculating how much new loan will be taken. In any case, it is not advisable to take the loan too little, it should cover at least the old loans and their expenses. But the loan should not be taken too much, because a useless loan will only bring unnecessary expenses and expenses, which of course will not benefit anyone. You should also consider the MFI or bank from which the loan is taken. If you switch to a completely new offering, the loan you have never taken before is a good way to get some sort of offer with low costs and interest rates. Offerings to new customers may also include an unpaid and interest-free payment period, or, for example, non-interest-free payment months for savings, for those countries where loan repayment is more challenging. They do not need to be used immediately, but they can be kept in case of severe situations.

Often, there are also “combine loans” packages that attract these customers as corporate customers and, given the benefits of combining loans, it is a sensible option. However, it is not worthwhile to do so, but first you have to check and familiarize yourself with the terms of your existing loans and the opportunities for the new loan at the moment, without forgetting your own financial situation and possible changes. Often, however, combining loans is the most sensible option and saves costs at every level.

Can you combine all types of loans?



If more and more expensive loans have been accumulated and the option to “combine loans” has been chosen from a provider, it is good to look at what types of loans you can combine. Here you should consider both the terms of the loan and the size of the loan, as both things can have a big impact on the combination of loans and its profitability. Below you will find instructions on what should be taken into account when loans are combined and what types of loans can be combined.

Amount of loans



So when you choose the ” combine loans ” package, a new loan is taken. This means that the loan is subject to the same criteria as other loans, the applicant must be able to repay it and meet the requirements for the applicants. In the case of many large loans, such as hundreds of thousands of euros, there are already a lot of guarantees required, as well as a high level of income if they were to be combined. In most cases, combining loans is more realistic with slightly smaller loans. These can be worth thousands or tens of thousands of euros, not even smaller ones. Sometimes they may be closer to one hundred thousand euros, but often the maximum amount of loans to be made by the net loan providers is of the order of 50,000 euros, and even more collateral and guarantees are needed than the smaller loans required. If, on the other hand, there are several small loans, which come in the form of a loan of thousands or a few tens of thousands of euros, it will be more sensitive. Almost all small loans can be combined and this, of course, saves both costs and ease of organizing everyday life when dozens of different invoices from different places do not fall on their own day. The loans should only be announced in connection with the loan application, and the applicant who meets the criteria will quickly receive an approved loan decision and money to the account once again with small loans and do not have to think about taking out a new loan effectively and on time back to the issuer.

Loan terms

Loan terms






If you think that combining loans sounds like a good option, the terms and opportunities of the previous loans should be increased. Not all loans may even be combined so that it becomes economically viable, as the terms of some loans may include large payments if the loan is repaid in a way other than the payment plan, and this is not always possible. These loans must therefore be excluded from the merger and, if all the loans have similar terms, the combination is not worthwhile. If, on the other hand, the loans can be repaid at once without additional costs, or so the costs, that is, the payments, are less than the advantage of combining the loans, it is worth combining the loans. Taking these factors into consideration and getting acquainted with the terms of your own loans, you can find out how much of the pooling is useful and at all possible.

Which provider

Which provider




The last thing to consider is who the bidders are willing to lend to the applicant. For example, a bank loan can be obtained very cheaply, but quick loans can be counted as a negative thing, and the loan is not granted because the applicant is thought to belong to a risk group, even if the financial situation is good, the loans would always be repaid on time and the credit data would be found. However, bankint is not the only source where loans can be combined. Another option is to get acquainted with the “connect loans” packages offered on the net by several MFIs. In these, fast-track sweepers are common among users, and often this is not an obstacle to borrowing. Of course, the applicant is required to have certain criteria for obtaining a new loan, but if these are easily met by hundreds of thousands and even tens of thousands of loans. No separate process per se goes through where the loans would be automatically transferred to the bidder or paid out mechanically, but after the loan has been received, the borrower will be able to pay the loans to each tenderer from whom the loans have been taken. Here, too, the loan comparison is the best tool to find the most affordable and suitable option for loan combinations.

When these considerations are taken into account, there will be no problem combining debt. However, the most important thing is to look at the solution as a whole, taking into account the current situation, the terms of the old loans and the terms and conditions of the new loan. Thorough familiarization with the facts always helps, and thus the applicant himself remains in control of the loans. However, there is a risk that the borrower will be enthusiastic about sudden extra money and will end up wasting, or even take out new loans, which of course is not worthwhile. Borrowing is most effective only if there is no additional loan after this loan.

What is needed to apply for loan consolidation?


What is needed to apply for loan consolidation?




In order for the loans to be combined successfully, the applicant must fulfill similar conditions that were also required for other loans. In small loans, the criteria may not be as strict, but in larger amounts, the applicant will be checked more closely. This means that the following things must be fine:

  • Age requirements
  • The financial situation is right
  • No payment defaults, or the possibility of providing collateral, or guarantors
  • Permanently resident in Finland

In addition to these, the conditions may vary between bidders, but when the minimum requirements are met, it is certain that “bundle loans” offer more than one party, so borrowing is almost possible for everyone. Often, in this way, it is also possible to get rid of the debt spiral, which may have been due to numerous smaller and larger loans. The larger the amount involved, the more you will have to pay interest and expenses, but in any case it will be a lower cost than what small individual loans can get.


Full Guide: Everything You Need To Know About Working Capital!



When we talk about sustainability and the growth of a business it is necessary to keep in mind that these two factors depend directly on how the financial health of that company is. If the accounts do not match, if the return is still lower than the investment and if there is not enough working capital to support the venture’s activities, many problems may arise.

According to a study conducted by Sebrae-SP , about 27% of new companies in Brazil close their activities in the first year of operation. This number grows even more and reaches 50% when we talk about deals that close the doors in the first four years of existence.

The same research also reveals that among the main causes of bankruptcy in the country is the lack of planning with regard to working capital . This is because, despite being an essential concept and an important part of the financial management of any business, many business owners consider it as secondary.

Much of an organization’s success is fully tied to good management and positive financial health. So, to help you understand what is working capital , how to calculate, how relevant to your organization’s economic sustainability, and what good results it can bring, we have prepared a complete content.

Continue reading this article and understand everything you need to know about working capital!

What is working capital?

What is working capital?

As important as the definition of social capital is the definition of working capital. Therefore, this should be one of the first steps taken by the entrepreneur.

We can understand working capital as all short-term demanded assets in a company. That is, how much the business has to bear the fixed and variable costs and expenses, or the amount that keeps the organization while the money does not return to the cashier. Finances need to be in order and there must be a balance between what goes in (current assets) and what goes (current liabilities).

Thus, working capital is composed of:

  • Assets available: money that is already in cash to pay the day to day bills;
  • Stocks: amount of resources you need to keep in the company stock;
  • Customers to receive: The amount that you need to have to be able to finance the term of payment you give to your client.

We can not therefore confuse working capital with the fixed investment of a business. The latter, in turn, represents the entire structure that has already been acquired for the initial operation of the company, such as real estate, equipment or raw material.

A good example for the use of working capital are the periods of seasonality. It is common that some months are better than others for any company and that sometimes the break-even point is not reached.

It is at this point that well-planned and well-structured working capital makes all the difference. When this happens, it will be responsible for meeting the basic financial demands, such as the payment of employees and consumer accounts.

Within the macro concept of working capital, there are some other specific definitions of the need of each company. Understand what they are:

Net working capital

Net working capital

The net working capital takes into account the ease with which that asset can be reverted in money so that the entrepreneur can account for the financial commitments assumed in the short term by his business.

In this way, it represents the amount of financial resources of the company, except for real estate, since they are not available for day-to-day use.

Negative working capital

Negative working capital

Being with negative working capital means that the organization is spending more than it receives and even summing up all the available resources will not be enough to pay all bills.

It is worth noting that if the company is in the beginning or in the expansion phase, it is common that the costs and investments are greater than the return to the cash. This situation should become worrying if it is extended for long periods.

Own working capital

It is the amount the company has to sustain itself and keep running without the need to borrow. Here, all the counts are in equilibrium and the difference between the assets and the current liabilities has a positive balance.

Working capital linked to investments

Working capital linked to investments

Working capital can also be used to cover expenses that the company has during the expansion period. For example, if the entrepreneur invests in new technology to increase production, it is necessary to have working capital to finance the largest quantity of raw materials that will be used.

Is there a difference between working capital and cash flow?

Is there a difference between working capital and cash flow?

The answer is yes! Just as the meaning of working capital can be confused with the fixed investment of a company, some people also mix it with the concept of cash flow . Although complementary, it is important to understand that the two are different things.

While cash flow is characterized by the way money is managed by the organization and by the cash input and output movement, working capital is the value that the firm has to use, ie it is the difference between what went in and what came out.

And between working capital and stock? Is there a relationship?


The answer here is also yes. Nowadays, there is still a large number of companies working with stock of products and, therefore, it should be seen as an integral part of working capital. In addition to representing the money that will come into the box in the future, the stock also generates expenses, such as transportation and maintenance.

How important is working capital to your company?


In addition to ensuring the organization and financial health, thus enabling sustainability, internal development and business expansion , knowing how much your company needs to remain facilitates and helps in administration. Calculating working capital correctly also brings some benefits that allow more assertive and therefore more efficient management. See below what they are:

1 – Assists in risk assessment and management


As we have already said, well-defined and structured working capital is part of the strategy of running a business. It guarantees liquidity to the company and can be converted into cash whenever it is needed. It is at this moment that it also contributes to risk management.

Both in small and medium or large companies, when this analysis is not done correctly can cause many financial, operational and even legal damages. By considering working capital as the main element of cash flow, a risk assessment follows the budget and warns of potential vulnerabilities in the company. In this way, it is possible to anticipate and prevent them.

A good example for this case is the goal setting for default rates. By means of this analysis it is possible to establish the limit point so that the company budget is not impaired and the working capital is not impacted.

2 – Ensures more predictability


Besides losing the credibility of the market, a company that is indebted also has its growth compromised. Therefore, being on the predictability of your finances up-to-date is extremely important to ensuring the organization’s balance.

Since working capital is responsible for paying the short-term accounts, it is possible to plan the future better and avoid short- and medium-term problems and debts that may arise.

3 – Improve financial management and control


Working capital signals how much the organization needs to maintain its own operation. In this evaluation must be understood all stages of the production process, from the raw material to the return of money to the cash.

It is the manager’s role to keep up with deadlines and values ​​in order to anticipate any need for capital. Being aware of this behavior is very important and helps the entrepreneur to understand the business routine, the needs of the business, the verification of the processes, the financial control and the decision making.

4 – It drives the growth of the company

4 - It drives the growth of the company

In the business world the opportunities can arise at any moment and you must be attentive and prepared for them. To invest in more modern structures, open new branches, adopt the franchise system or even buy other companies is necessary to have a short term net amount available for such. That’s why, when we talk about expanding a company, having an organized working capital makes all the difference.

What are the risks that poor working capital control can bring to your company?


As we mentioned in the above topics, planning a financial control and knowing the exact amount of working capital are things that bring many benefits to any company.

In addition to identifying the best time to buy, it will be possible to estimate the terms that your business can take and avoid the imbalance between payments and receipts. The short-term accounts are paid, the cash remains positive and there is the possibility of creating wealth in the long term.

When control of working capital is not done correctly, the operational risks to the company increase, jeopardizing the smooth running of internal activities and running the risk of leaving the cash in the red due to the debts that have accumulated.

This inefficient financial management can be considered as one of the main reasons for the breakdown of a company . Unfortunately, if the money is not enough, the company can not resist and can go bankrupt. Therefore, it is indispensable to carry out this control.

How to calculate working capital?

To begin calculating the ideal working capital of your venture you need to identify all the variables that are related to the operation of the business. Some factors that may influence the amount required are:

  • The type of business: commercial companies, industries, banks, utilities, among other types of business require different sizes of working capital, since the demands and the cash flow are also different;
  • The size of the business unit: working capital calculation depends proportionally on turnover;
  • The turnover of stocks: this ratio is also proportional. For example, if a company’s stock is large, but turnover is slow, there is a greater need for working capital;
  • The production process: a longer and more complex manufacturing process requires a larger working capital. The type of production is also an influence factor, depending on whether the company operates with machines and automation or with salaried labor;
  • Conditions of purchase and sale: if the company uses credit to make their purchases, the working capital may be lower. Now, if sales are also made on credit, working capital must be higher.

Now that you’ve defined and identified the points that help determine the value of your working capital, it’s time to put your hand in the dough and do the math!

First, you need to know what are the current assets (AC), that is, all the resources that, when added together, generate the company’s revenue (cash, inventory, accounts receivable or financial investments). We can consider them as investments, and the larger they are, the longer the average term to return in cash and the more resources will be needed to cover this period.

In addition, you must also plan your company’s fixed cost (expenses such as rent, energy bill, water bills or salaries) and have an estimate of the variable cost of the company (accounts related to the purchase and sale of your products, such as raw material or equipment). To the sum of these two we can give the name of circulating liabilities (PC).

Once you have these two variants determined it is possible to calculate the working capital (CG), which can be represented by the following formula:


Let’s suppose that a company has $ 40,000 to receive from its customers and $ 50,000 of accounts to pay, putting in the equation would look like this:

CG = R $ 40,000 – R $ 50,000

CG = – R $ 10 thousand

This means that the working capital requirement of that business so that it continues to run is R $ 10,000.

The result of this formula can be the key to both success and failure of many ventures. Hence, it is important to calculate working capital correctly and treat it as one of the priorities of your business.

If there is any difficulty in determining such numbers, it is advisable to find a specialist in the area who can guide you.

How to get the working capital for your company?

How to get the working capital for your company?

After figuring out what amount you will consider to establish as business working capital , it is time to find the sources that will help you organize it. If your business is already spinning on its own, and if the account between the lead time of the customers, the size of the inventory, and the vendors’ payment deadline closes positively, you’re doing very well.

Some basic tips are to shorten the time to receive your company, try to negotiate better with your suppliers, optimize inventory and align bonuses with the commercial, sales and control teams so that they worry about securing the best payment times for each one of the areas.

But not all cases are easy this way. It is very common that some start-up companies that need the resource to expand are not able to obtain working capital on their own and therefore need to use expansion strategies or help from third-party sources.

Especially for micro and small business owners, an extra income is critical while costs are still higher than earnings. At such times, joining loans is a recurring practice and when done in an organized and planned manner will bring many benefits and will serve as a kick to leverage business activities.

Understand what are the main modalities that can be used as working capital:

Financial Services

Financial Services

In the vast majority of cases, equipment and materials can be financed by companies. Here there are interest rates previously set and the payment term may be longer. The great difficulty is that there is a demand for real guarantees, such as real estate, own resources and even the object that was financed.

Credit card

Credit card

In addition to channeling all expenses in one place, the business credit card also allows for financial planning and control. The payment can be done at once, avoiding possible interest, or in installments.

But beware: if not used properly the credit card can pose a danger and, over time, become a good snow.



The main advantage of overdraft is to be able to be used in an emergency situation, since it is a credit limit available in the checking account in addition to the positive jump that there is. But just like the credit card one needs to use responsibly because the interest rates are too high and can result in a large debt for the company.

Online Unsecured Loans

Online Unsecured Loans

One of the simplest, quickest and cheapest ways to guarantee your company’s working capital is to opt for unsecured loans online . In addition to having more advantageous rates for the entrepreneur, they are well bureaucratic than the conventional loans. You receive the reply regarding your credit analysis within two days and shortly thereafter the amount is already made available to you.

BizCapital specializes in this type of loan and has as its focus the bureaucratization of this practice to facilitate the life of micro and small entrepreneurs and boost new business.


So, did you like this article? We at BizCapital are here to help business owners who want to see their business take off! Keep an eye on our blog and check out other tips on the world of entrepreneurship.