Small Business Debt Consolidation Loan Guide

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With record rises in interest rates, loans that made sense 2 or 3 years ago might now be expensive burdens to business. If a business is carrying multiple different kinds of debts with a number of payments falling on different schedules the reality of juggling all these payments can be a cash flow nightmare.

Famed investor and co-founder of the Hedge Fund Pershing Square Capital Bill Ackman has explained in his opinion that free business cash flow is the most important business metric. Really, when it comes down to it, cash flow – or a lack of cash flow – is essentially the only reason businesses fail.  For this reason, debt consolidation can be an important cash flow strategy that business owners can take to benefit their business and make life more manageable.  In this article we’ll look at small business debt consolidation in more detail including when a business might need a debt consolidation loan and different debt consolidation loan solutions.  At the end of the article we’ll share two debt reduction strategies you can use to help turbo charge debt reduction in your business and achieve better business finance.

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What is debt consolidation?

The term debt consolidation describes the process that multiple debts are refinanced under one loan.  Debt consolidation for businesses could involve refinancing a number of different business loans and other creditors, like debts to suppliers. The benefit of bringing multiple debts into one singular loan is it makes the overall debt easier to manage and debt consolidation can also lower the repayments required.

Small Business Debt Consolidation Loan Options

As interest rates have gone up credit has become more expensive to access which means the return on capital is less but also repayments are higher.  In an inflationary environment interest rates are rising at the same time business owners are facing increased supply and labour costs – all of these factors negatively impact cash flow.  For this reason, the main reason a business would choose a debt consolidation loan strategy is to improve cash flow so it’s important to choose the right small business debt consolidation loan.

Unsecured business loans can be used for debt consolidation; they are an ideal solution for paying creditor debts like paying suppliers.  As business conditions have tightened and unsecured lending policy has become more conservative. As a result an increasing number of lenders are not wishing to payout other fintech loans as lenders recognise statistically these types of loans have a higher level of default. We also recommend to our clients they avoid unsecured loans with daily direct debit repayments as loans from these lenders often make cash flow more difficult and increase the likelihood of direct debit dishonours.

Unsecured Overdrafts can be used for any legitimate business purpose, so once set up they make an excellent option for debt consolidation. We recommend they’re best used as a short term debt consolidation strategy and to aid cash flow when seeking business consolidation loans unsecured.  

Term Loans are available from a wide range of providers including major banks and private lenders.  The advantage of a term loan from a bank is they will typically come with the lowest rate but they can be harder to obtain as the policy requirements are a lot tighter.  Banks also tend to be slower with their loan application process.  Private loans on the other are a genuine low-doc loan application alternative to bank loans and, unlike loans from the banks, can be used to pay out tax debt if your debt consolidation strategy includes paying out the ATO.  Business owners with a mortgage on their property can access private lenders using second mortgages.  If you have sufficient property equity to use as security for the loan and a legitimate exit strategy to payout the loan by the end of term, private loans are an option when you need bad credit debt consolidation loans guaranteed approval and debt consolidation loan no credit check.

How To Clear Debt Quickly

Step one of getting your debts under control is to work out exactly how much you owe to who.  A good way of doing this is to list all your debts, their outstanding balances, minimum repayments and interest rates. Once you’ve done that consider using the debt avalanche or debt snowball debt reduction methods for debt relief.

The debt snowball method is to focus on your smallest debt first and pay whatever extra amount you can to pay that off as quickly as possible. Once that’s paid off you take all the money you were paying off that business debt and contribute it to your next debt. As each debt is paid off the amount you’re paying into each debt gets bigger and your repayment size snowballs which accelerates your debt reduction.

The avalanche method of debt reduction is to focus on your highest interest rate debt first by paying whatever extra amount you can manage into this debt and making the minimum repayment on all your other debts.  Once your highest interest rate debt is paid off you focus on the next highest interest rate and add to the repayment again.  By focusing on the highest interest rate first you save the highest amount of interest possible as you pay off debt much faster than if you were making minimum repayments.

Work With An Expert For Your Business Consolidation Loan

If your business needs help it’s important to work with an expert in small business debt consolidation loans – this is especially true if you need bad credit debt consolidation. For those seeking debt consolidation loans with bad credit, make sure you’re working with a finance expert who has experience with private lenders and experience in obtaining loans to cover the kinds of debts you wish to payout. are experts in small business debt consolidation loan and debt consolidation loan no credit check when you need solutions outside of the major banks and other.  Contact us here for your business consolidation loan.


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