Consolidation Loans for Business
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What is debt consolidation?
Debt consolidation is the process of grouping together your current business debts into one loan and repayment schedule. It’s most common for personal loans however you can access both for small and medium businesses too.
How does debt refinancing differ from consolidation?
People often use these terms interchangeably when talking about business finance; however, in technical terms, they are different. Where debt consolidation is about grouping multiple debts into one loan, debt refinancing is about getting a single debt at a lower rate. This will normally involve a new lender paying off your debt at a reduced fee and offering you lower repayments over longer terms. At Aurora Capital, we can help you and your business find great deals in both.
What are the benefits of debt consolidation loans for small businesses?
From reduced APR to lower monthly payments, additional borrowing to better cash flow management, there are several benefits to these types of finance. Read on for a quick guide to the reasons why you may need debt consolidation:
- Reduced APR – When consolidating your business debt, you’re simply moving all debt into repayment. By making sure your terms are better than your current average for all debts, you’ll be able to reduce your overall APR. This is nearly always guaranteed when refinancing short-term loans as these feature higher rates than longer-term debt consolidation loans.
- Lower monthly payments – Because debt consolidation loans and refinancing have lower APR rates and longer terms than most other business loans, you’ll end up paying less per month. You need to remember that you’ll likely be paying off your debt for longer, but if cash-flow is a constant struggle for your business, debt refinancing or consolidation may be the answer.
- Additional borrowing – As you’ll be paying less per month, you can acquire extra funding when consolidating current debts. This will be judged on a case by case basis so get in touch with one of our team to find out if you’re eligible. If you have bad credit and you’re looking for further borrowing, it may be worth checking out our CCJ loans for business.
- Easier cash flow management – Managing a single account is much easier than having several debts requiring payments, potentially on different dates and from different accounts. On top of streamlining your payments into one easy-to-manage single account, you’ll also be paying less, increasing your cash-flow and helping your business function as it needs.
- Increased revolving credit – If you’re consolidating a business credit card loan, you may be able to free up that revolving credit for re-use. Business credit cards are incredibly useful for employers, helping staff make payments, keeping track of those payments, while managing unexpected costs too.
How to Apply
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What are the down sides of debt consolidation for business?
Longer debt terms – Most debt refinancing and consolidation loans have longer terms than your current terms. This means you’ll be paying off the debt over a longer period than you would if stuck with your original terms. The big difference is that you’ll have more money to run your business with per month, but over time, you’ll likely end up paying more.
Preparing for debt consolidation and refinancing plans
When considering debt consolidation or refinancing, it’s worth having some information handy before you get in touch. Don’t worry too much if you can’t access all this information, as our financial advisors can help you. That said, consider taking the following steps before you apply:
- Record all current debts
- Check for early settlement penalties
- Calculate total business debt
- Calculate average APR
- Work out total cost and whether it’s worthwhile
As mentioned, it’s worth speaking to our team to find out if debt refinancing or a consolidation loan for business is right for you. Fill in the form at the top of this page, and we’ll get in touch and provide you with all the information you need.