This article is the ultimate guide on the best options for business debt consolidation loans and finding the right solution for your business. When you consider getting a business debt consolidation loan, there’s a lot you need to consider. If you have existing debt, and are having trouble managing your payments, the best solution is to free up cash flow.
With a business debt consolidation loan, you can pay off several business loans with the funds from a debt consolidation loan. The purpose of a business debt consolidation loan is to help you refinance your existing debt, and to gather all of your loan payments into a SINGLE payment. Secondary objectives of business debt consolidation loans include lowering your interest rate, and increasing the term of the loan.
As a result, if you want to make repaying your business debt easier, you’ll want to explore all the various debt consolidation options available to you. To help you through this process, we’ve created this article that goes into depth on how to get a business debt consolidation, when to get a business debt consolidation loan, and why you should get a business debt consolidation loan.
Best Business Debt Consolidation Loans
- Traditional Bank Loans
- SBA Loans
- Invoice Factoring
- Merchant Cash Advance Consolidation
How Business Debt Consolidation Loans Work
Before we get into the best options for business debt consolidation loans, it’s important to understand how they work.
On the whole, business debt consolidation isn’t a bad thing. Getting debt financing is one of the best ways to grow the business. According to the SBA, 3/4 of all small business funding comes through the debt. The issue is when you take on too much debt. While taking on debt can solve a lot of problems, in the long term the rates can be expensive, and can be a hinderance to your overall small business growth. In situations like this, you’ll want to consider business debt consolidation loans. If you’re struggling with multiple daily loans, or multiple business loans, you’ll want to get a small business debt consolidation loan which can MERGE these multiple payments into singe payment – with a predictable interest rate, and single payment schedule.
Business Debt Consolidation vs Refinancing
Sometimes, people use the term business debt consolidation and business debt refinancing as synonyms. Although refinancing and debt consolidation are similar, it’s important you realize they aren’t the same. With debt consolidation, you’re taking all of your loans into one loan. When you refinance a business loan, you’re taking out a new loan, at a lower interest rate, and your goal is to pay off your higher interest rate loans
Top Business Debt Consolidation Loan Options
With all of this said, you’ll want to look for a long term business loan that can allow you to consolidate all of your debt and pay it off in smaller amounts over a longer period of time. The eventual consolidation product you turn to will depend on things like your credit score, your business revenue, the age of your business, how much you owe – and the terms of the funds you owe.
Traditional Bank Loans
Banks loans are one of the best ways to consolidate business debt. Bank loans have low interest rates, and long terms. Lenders usually offer huge amounts of capital. It’s difficult, though, to qualify for bank loans. If you’re looking for a business debt consolidation loan from a bank, you’ll need to be highly qualified. You’ll need to be in business for multiple years, have a strong credit score, and substantial revenue. If you can, though, get a business debt consolidation loan from a bank – you can expect the following:
Length of term: 5-10 years
Interest rates: Under 10% APR
Payment: Monthly payment
Local community banks or national banks can help you when it comes to a business debt consolidation loan. You’ll need to work with directly with a bank, and get the funds. Once you get the funds you would use them to pay off your existing business debt.
If you can’t get a traditional loan from a bank, then a SBA loan is the next best option. With an SBA loan you can get a federally backed business loan. Loans for this can be used for a variety of purposes. The SBA has certain restrictions for using 7(a) loans for debt consolidation. You should work with an SBA lender, like a bank, to apply and get the SBA loan for business debt consolidation. With SBA loans you can expect a term of 10 to 25 years, with interest rates of 7 to 25% years, in addition to a monthly payment. With bank loans, and SBA loans, you’re getting a long term, and low interest rate.
At the end of the day, there are a lot of things to consider, and a lot of things you can do, in order to consolidate your business debt. Business debt consolidation loans are a great way to pay off your existing debts.
If your current loans already have a low interest rate it’s unlikely that business debt consolidation loan will help your business. In general, the higher the interest rate of your existing loan, the better the business debt consolidation will be.
If you have multiple short term loans, like a merchant cash advance, you might be able to consolidate your business debt into one term loan. If you’re looking for a traditional bank loan, or term loan, in order to consolidate your business debt, then you’ll need a GREAT personal credit score. Additionally, you’ll need to have amazing personal and business financial records.