Companies can get into difficulty if they have too much debt or the wrong type of debt. The difficulty is that debt payments can consume too much revenue, thus hampering a company’s ability to pay its operating expenses and limiting or even blocking its forward progress. An important solution can be debt consolidation. 

What is Debt Consolidation and is it Right for Your Business 

Debt consolidation is the combining of existing loans and cash advances and then refinancing them into a single loan with better terms. The outcome frees-up cash flow and puts the company in a better financial position. 

To determine if debt consolidation is right for a business, the owners should ask themselves if: 

Debt payments are consuming all or most of the available cash flow. 
Critical payments like payroll or supplier payments must be delayed or somehow juggled. 
Interest rates are so high that interest payments are eating into profits. 
Payments against debt prevent investing in new equipment, inventories, or other important growth initiatives. 

Business Debt Consolidation: The Pros and Cons 

The pros include first, being able to more comfortably meet monthly debt payments, thus reducing financial stress on the business and its leaders. Second, improving the business’s cash flow. Third, lowering and improving interest rates and/or extending loan terms. Fourth, allowing a company to more beneficially structure debt to support its future goals. And fifth, making the debt easier to manage, compared to multiple loans with different terms and payment due dates. 

The cons include first, the new loan extends the terms of your current debt, thus extending the total cost of the debt over the new life of the loan. Second, while debt consolidation can rectify some financial problems, it does not fix a bad business model. And third, discipline will be required to not allow past financial problems to be repeated. 

Seek Expert Financing Assistance 

Contact Quick Capital Funds based in Sun City, AZ for expert financing assistance. We offer a range of options to meet your operating needs and help you reach your growth goals.