Federal Loan Consolidation Programs: How to Qualify

There is nothing easy about keeping a business afloat in the current economic climate. Even with the aid of government support, in the form of loans, the pressure is acute. But with federal loan consolidation programs now available, there is a way to negotiate a way through these difficult times.When business slows down, it is easy to find oneself in a downward spiral. Less revenue creates greater difficulties in making those monthly repayments. With that in mind, getting consolidation program approval can be the safety net that the business needs, lowering the pressure and lightening the financial load.This is not simply a matter of taking out one loan to deal with another. A typical business will have taken on anything up to 6 loans over a 10-year period, and the weight of so many federal loans - despite their excellent terms - can be crushing. With a consolidation loan, the debt is restructured rather than added to.How To QualifyUnlike their private equivalent, applicants for federal loan consolidation programs need to qualify to be considered. This is because the federal and state governments provide programs that exist to help, not to make a profit. So, there is a need to ensure only those businesses in genuine need of financial aid are admitted to a program.The first qualification criteria is that applicants must have already received federal financial aid in the past. These loans need to have been granted in the areas of either agriculture (farming) or business before there is any chance of getting consolidation program approval.In the agriculture sector, applicants should have secured funding from the FSA, with four loan types considered: Farm Loans; Commodity Marketing Loans; Ownership Loans; and Farm Storage Loans. For businesses, meanwhile, federal loans in the forms of a Small Business Loan, Disaster Loan, Indian Loan for Native Americans, Micro Loans, and Physical Disaster Loans can also see an applicant qualify.Basic Criteria To MeetThere are other criteria that must be met before a business or farm owner can benefit from federal loan consolidation programs. Of course, aid is reserved for those in real need. Even if the applicant has been granted federal aid in the past, there is no guarantee their application will be accepted.For this reason, it is also necessary to provide documented proof of financial hardship before getting consolidation program approval. Not only that, but it is also necessary to illustrate how the consolidation plan will have a positive impact. For example, there must be a plan showing how the lower repayments are to contribute to the business surviving.In some cases, the need for a federal loan is much more obvious, such as businesses that have suffered from a natural disaster, like a flood, hurricane or earthquake. The physical damage is clear to see, so qualifying for a consolidation program is quite straightforward.Advantage of Federal ProgramsIt is always possible to get a consolidation loan from a private lender too, but with federal loan consolidation programs, interest rates are extremely low and the repayment schedule is generally longer. Private programs have higher interest rates and have stricter repayment schedules.The consolidation loan is used to buy out the remaining balances on loans, with the borrower then repaying the sum in one monthly repayment and at one interest rate. This inevitably means savings are made. For example, 6 loans adding up to $150,000 can be repaid over 10 years at $1,250 per month; but at a more affordable $625 over 20 years.Getting consolidation program approval on federal term means that the savings can be even greater, which means that the benefits are even greater. When it comes to federal loans, and the debts that they create, a consolidation program is the ideal solution.