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If you are managing several business loans, credit cards, or lines of credit, our team at Business Funding Group LLC (BFG) can help with debt consolidation. We specialize in helping small companies get Small Business Administration (SBA) loans to refinance their debt into one loan with a lower interest rate and a longer repayment term. We guide you through every step of the process, so it is as stress-free as possible.
BFG’s 10 small business debt consolidation strategies could make your monthly payments more manageable and increase your cash flow, making it easier to focus on business growth.
1. Organize and Evaluate Current Debt
Before consolidating, you need to have a clear picture of exactly how much you owe. Make a list of:
- Loan balances
- Interest rates
- Lenders for each loan
- Monthly payments and due dates
- Prepayment penalties
Understanding your business’s debt schedule can help you decide how to proceed with a consolidation plan.
2. Avoid Short-Term Loans
Short-term loans may be tempting since they offer a quick fix. However, these loans often come with high rates and fees that put you in a worse position than you were in before. You need a strategy that consolidates your small company’s debt with a long-term loan that actually improves your ability to pay, not makes it harder.
3. Pursue an SBA 7(a) Loan To Refinance Debt
The Small Business Administration offers the 7(a) loan program for debt consolidation. This loan has competitive interest rates and repayment terms of 10-25 years, so it can replace multiple high-interest loans with one affordable monthly payment.
To qualify for this advantageous loan, you:
- Must have a for-profit business that operates in the U.S.
- Need a good credit score (at least 700)
- Can demonstrate an ability to pay the loan back
- Have been current on your existing debt for the last twelve months
Give BFG a call if you need help determining whether you qualify!
4. Prioritize High-Interest Debt
High interest is often the main factor in what makes monthly payments unmanageable, so you should focus on consolidating high-interest loans first. These often include credit cards, short-term cash advances, and loans with daily or weekly payments.
Small companies can use SBA loans to refinance debt that was incurred for legitimate business expenses.
5. Consolidate Equipment Loans and Leases
If you have financed multiple pieces of equipment separately, you may be able to roll them into a single SBA loan. The rates and terms could be more advantageous than your current financing, making this a good strategy for a small business.
6. Negotiate With Lenders
It is a mistake to assume your current loan terms are set in stone. Some lenders may offer temporary payment relief, interest rate reductions, and early payoff discounts. It does not hurt to ask!
Negotiating could also give you time to explore other options, such as consolidating small business debt with SBA refinancing.
7. Be Mindful of Prepayment Penalties
While some lenders may offer discounts for early payoff, some business loans penalize paying off debt early. You should review loan agreements, fee structures, and prepayment clauses to determine the best debt consolidation strategy for your small company. BFG can help you evaluate which debts are the most cost-effective to refinance and which are not.
8. Use Profits To Reduce Total Debt
Consider using some extra company profits to reduce your overall debt balance before consolidating. This can improve your loan terms and reduce the total interest paid over time.
9. Work With Loan Packaging Experts
BFG specializes in aiding small businesses in securing SBA financing. We help by:
- Reviewing your debts and goals
- Preparing your application
- Matching you with a trusted lender
- Managing the entire process through closing
We only take a fee when you close on a small business loan, so we will remain diligent in helping you from the beginning to the end of the debt consolidation process.
10. Stay on Top of Your Finances Moving Forward
It is smart to use debt consolidation as an opportunity to build a stronger and more profitable small business. Business owners are more likely to be successful when they treat consolidation like a reset and stay in control of company debt going forward.
Track your expenses, stick to a budget, and avoid taking on unnecessary debt in the future.
Call BFG To Consolidate Business Debt With Expert Help
If you are tired of juggling multiple debt payments and due dates, it might be time to consolidate.
We have helped profitable small companies with these 10 small business debt consolidation strategies, and we can help you too.
Call us or fill out our simple application online to get the conversation started.