Federal Loan Consolidation Programs: What to Keep in Mind

It is not unusual to see governments provide financial support to enterprises, especially when jobs are created (or saved) as a result. But whether it is a farmer or a businessman that is seeking financial assistance, there is still a need to repay any loans taken out. And if they should get into trouble meeting repayments, then a good solution is a federal loan consolidation program.The whole idea behind consolidation programs is that existing loans are paid off in one lump sum, and the remaining single loan is then repaid at better terms. Thankfully, securing loan approval is not very difficult, if it can be proved that repaying existing loans is too difficult.What the program means is that federal loans are repaid, and the borrower is not forced into bankruptcy, jobs are maintained and the economy is helped. Everyone is a winner, but there are aspects that must be kept in mind.Consolidation Programs: Federal vs PrivateWhenever we apply for loans, there are two types of sources to approach. These are private lenders, like banks, and public lenders, such as government institutions. The loans offered by these two sources are generally very different too, with private lenders chasing profits. Public lenders, however, offer federal loan consolidation programs to aid in financial difficulties.The key differences between public and private loans lie in the interest rates charged, with no surprise in the fact that it is the federal kind that has the lower rates. Private loans, on the other hand have high rates in order to push up the profit margin. It means that, on the condition that a particular applicant qualifies, securing loan approval is something that is almost assured.However, while businesses benefit greatly from taking out federal loans, the fact remains that they are built on a mixture of federal and private loans. This can cause some complication when it comes to securing a consolidation plan as the degree of benefit enjoyed can differ.How to Get ConsolidationThe first step in securing a consolidation loan to clear debts is in qualifying for the chosen federal loan consolidation program. This is not a particularly complicated process, but it is dependent on the applicant proving they are in financial difficulties. Also, federal programs can only be used to restructure loans secured from the federal government.When it comes to federal aid for businesses, there are two principal sectors that are served: agriculture and commerce. The agriculture sector in particular has a vast array of loans to apply for, each helping to make a farmer more competitive. The selection of loans include general Farm Loans and Farm Storage Loans. Securing loan approval is achieved through the FSA.For the commercial sector, there are also many federal loans that can help a business to develop their competitiveness and marketing scope, particularly for the smaller enterprises and those in need of real financial help.Qualifying CriteriaSecuring a consolidation loan is going to depend on meeting the stated criteria. Like any other financial scheme, federal loan consolidation programs are not going to be given to just anyone.The key information is that the applicant is suffering financial difficulties, with their ability to repay existing loans curtailed either because of market reasons or environmental reasons. However, once such factors are proved, then securing loan approval is quite straightforward.It is also important to remember that federal loans are also available for structural improvements. So, damage that forces a temporary closure can be enough to qualify an applicant too. This is because federal lending institutions see their role as providing support to ensure businesses do not needlessly go under.