Even with solid management, services or products, and a good business plan, even positive growth and profits can change, and change quickly. Cash flow, sales receipts, and more can all dry up, leaving you with debt you can’t afford to pay.
It can leave you struggling for small business funding to manage your day-to-day operations. So what do you do? What can you do? Business debt consolidation may be the answer!
Business Debt Consolidation Defined
Business debt consolidation, like all forms of debt consolidation, is fairly straightforward. In general, it involves combining existing debt (like loans, lines of credit, and cash advances) into a single debt.
Usually, this removes debts from several services into one, which can save fees. It also means you can get a lower interest rate, and pay off higher interest debt with a lower rate small business debt consolidation loan.
The net result is savings of time and money. This is quite similar to how individual debt consolidation works (though often you have a greater number of options available as an individual as opposed to a small business).
Debt Consolidation vs. Debt Refinancing
Debt consolidation is not the same thing as debt refinancing, though many people and businesses can often confuse the two terms. Both focus on reducing debt and making it more manageable.
But business debt consolidation works by a different mechanism than business debt refinancing. Debt refinancing involves replacing an existing loan with a new loan. It’s usually handled on a single loan basis.
Debt consolidation for business owners, as we explained above, involves a new loan being used to pay off multiple loans – effectively, consolidating outstanding loans and debts into a single loan.
Importantly for business owners, debt consolidation and debt refinancing can both be done to reduce debt load. Both are valid forms of debt help for small business.
For those with multiple forms of debt, though, the best starting point is widely considered to be the small business debt consolidation loan. Then, once that’s in place, you can always refinance the new, single loan later on for better rates and terms.
Secured vs. Unsecured Debt Consolidation Loans
Like other forms of small business funding and small business loans, business debt consolidation loans can be either secured or unsecured. Secured loans are backed by collateral from the borrower, aka the small business owner.
These kinds of loans typically offer better interest rates, but present a risk for the borrower. If they default on the loan, then the lender can seize the collateral and sell it off to settle the debt. Unsecured loans don’t require any collateral.
They are a larger risk for the lender as opposed to the borrower. This means the interest rates tend to be higher. However, there is no risk of losing your home, office, car, or other assets if you default on the loan.
For most small business loans, owners tend to prefer the unsecured type. This is especially true with small business debt consolidation loans.
Most business owners who take out small business debt consolidation loans have a meaningful amount of debt, and don’t want to risk their personal or business assets in exchange for saving some money and making debt more manageable.
Larger and larger small business loans of all types tend to be harder to obtain without collateral, but for most small businesses, an unsecured loan is the ideal choice.
Benefits of Small Business Debt Consolidation Loans
So, if you’re interested in a small business debt consolidation loan, you might be wondering what the benefits are.
For small business funding, debt consolidation loans provide several financial and functional benefits. These include:
- Streamlining the debt management process from several providers to a single outstanding debt
- Reducing fees by only having one outstanding loan instead of several loans or forms of credit
- Saving money through a lower interest-rate loan (compared to higher-interest loans, credit lines, and cash advances that you may already have)
- Getting out of debt faster via the business debt consolidation process
- Enabling debt refinancing of your single outstanding debt consolidation loan after completing the business debt consolidation process
- Improving the credit score for your business, by having a clear history of repaid loans and a single outstanding loan or credit facility as opposed to several
Why Choose BizFly Funding for Debt Consolidation for Business Owners?
If you’re a small business owner and are looking for a small business debt consolidation loan, or any other kind of small business loan, consider BizFly Funding. BizFly Funding offers speed, service, and flexibility, with multiple loan options, durations, and interest rates.
We maintain very minimal qualification requirements for our loans, including business debt consolidation loans, so that we can help as many small businesses as possible.
You can apply online, and be pre-approved for debt help for small businesses in as little as 30 minutes. One of our expert staff will review your information, and can offer a full approval on your small business debt consolidation loan within just a few hours.
And you can receive your funds in as little as 24 hours after approval. In just a day or two, you can be on your way to having only a single outstanding loan, saving money, saving time, and saving you headaches in running your business.
