Booking for small business tends to get more complicated if you have more than one loan and this situation can negatively impact monthly cash flow. Debt consolidation can simplify your accounting and often save you money in process. Through consolidation of your debt, you can lower your monthly payment, lower your interest rate or in some circumstances you may even be able to achieve both. This can improve your cash flow, raise your liquidity and enable you to expand your business. Of course, consolidation in the long run may also mean your total debt is higher and that you may be paying it off longer. Like with personal loans, business debt should be consolidated only if that move makes financial sense for your business and the benefits outweigh the costs.
- Multiple loans can be a problem for many reasons, so you should consider consolidation.
- Debt consolidation happens when you combine multiple credit lines into one for repayment.
- Read on to learn about the upsides and bad parts of consolidating your business loan, and what it do for you.
“Banks and other lending institutions don’t like to see a list of multiple creditors. If you’re seeking a separate loan, consolidating your existing loans into one may help you get that other new loan.”