On the path to growth, business owners sometimes find that they’ve accumulated more business debt then they originally anticipated. Consolidating business debt is possible and involves combining multiple debts into a single loan, often with a lower interest rate or lower payment. Consolidating business debt may potentially reduce overall costs, making it an appealing option for businesses saddled with multiple debt obligations.
Review Your Current Debt
Before seeking out debt consolidation financing it’s important to perform a comprehensive review of your existing liabilities. Make a list all outstanding loans, merchant cash advances, credit card balances, and other liabilities, and make a note of their corresponding interest rates, monthly payments, balances, prepayment penalties, and due dates. Understanding your complete debt load will help you determine if consolidation is the right choice.
Explore Consolidation Options
There are various consolidation options available for businesses, including:
- Business Debt Consolidation Term Loans: These are loans specifically designed to pay off multiple business debts. They often come with fixed interest rates and predictable payments.
- SBA Loans: Small Business Administration (SBA) loans, such as the SBA 7(a) loan, can be used to consolidate debt. These loans typically offer low interest rates and long repayment terms.
- Business Credit Lines: For smaller debts, a business credit line with a low interest rate, revolving balance feature, and flexible repayment schedule may be a good choice.
Locate a Lender
There a many lenders that offer business consolidation financing, and a quick online search will produce multiple results. It’s important to work with established lenders that have verifiable track records of performance and positive reviews. Unfortunately, there are many imposters and inexperienced companies representing that they offer business consolidation loans. Be sure to carefully vet any individual or company you engage, and never pay upfront fees.
Stick to Your Repayment Plan
Once you’ve located a trustworthy lender and secured a consolidation loan, stick to the repayment plan and loan terms you’ve agreed to. Prioritizing timely payments will keep you in good standing with your business lender, and avoid taking on new debt that could put your cashflow or consolidation loan in jeopardy. Consistent, disciplined repayment will help you get the most benefit from your consolidation loan, improve your profitability and enhance your business’s financial health.
By understanding your options and through careful planning, consolidating business debt can be a strategic move to help you Borrow Confidently™ and set your business on the path to long-term growth.
Interested in accessing the best business debt consolidation financing? Contact our recommended best lenders SmartBiz and BHG Financial.