Consolidating your business debt into one payment can lower your monthly payments and streamline your budget.
The process consists of taking out a new loan and paying off all of your existing debt.
While it will likely cause a temporary dip in your business credit score, it will allow you to move many different debts into one payment.
The process of consolidating business debt is very similar to doing so with consumer credit cards.
When exploring consolidation options, look for financial institutions that offer lower interest rates than what you are currently paying on existing debt. In addition, you will need to apply for a loan that covers all existing debt on your balance sheet.
So, if a bank offers you a loan of $25,000, this would not work if you had $40,000 in debt. And while some banks may offer a higher ceiling on your potential loan, it still only works if your interest rate is lower than at least the highest rate you currently pay.
There are a number of pros and cons when it comes to business debt consolidation.