Business debt consolidation is worth pursuing if you feel burdened by paying multiple creditors every month. That can relieve the stress of missing a payment, damaging an important relationship, or lowering your credit score. 

How Business Debt Consolidation Works 

Debt consolidation refers to getting a loan that is designed to pay off other high-interest debts and replacing them with one monthly payment instead of multiple payments.  

Here’s how debt consolidation works. First, you need to evaluate what you want to accomplish with debt consolidation. Second, add up your business debts including loans, lines of credit, and credit card debt. Consider the amounts owed, interest rates, repayment terms, and due dates. Third, decide which debts to consolidate. Fourth, before taking out a debt consolidation loan, check for any prepayment penalties on your existing debt, and account for that in the new loan amount. Fifth, research potential lenders and compare potential new loan terms. Sixth, organize your loan application documents. Those can include your business plan, two years of tax returns, bank statements, financial statements, and your personal and business credit scores. Seventh, complete and submit the loan application. Eighth, pay off your old debts and get confirmation that they are paid in full. 

Pros and Cons of Debt Consolidation 

The pros of debt consolidation include potentially getting a lower interest rate and saving money every month, shortening (if you wish) your loan repayment terms, making loan payoff less stressful, and improving your credit score. 

The cons include that a lower rate isn’t guaranteed. And with the new loan origination fees, your loan may be more expensive. 

It is important to note that a debt consolidation loan is not a financial cure-all. It is not a substitute for making smart financial decisions. 

Debt Consolidation Loan Options 

Loan options include applying for a bank loan, seeking an SBA loan, and seeking a loan through an alternative lender or business loan specialist. 

Seek Financing Assistance 

Contact First Class Lending for the funding you need, fast. We can provide customized financing solutions to meet your business goals.