Business consolidation loans help people manage business debt by lengthening borrowing terms and reducing monthly payments.
Debt typically isunavoidable in the business world.
However, these debts can quickly become a mounting problem if you cant keep up with payments.
Businessdebt consolidationallows you to combine multiple loans into one.
This gives you one monthly payment and often a lower interest rate.
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What Are Business Consolidation Loans?
Business consolidation loans and small business consolidation loans combine multiple debts into one loan with a simplified repayment plan.
It might look something like this:
In total, your business owes$3,530 per month.
Then you clump them into one loan with one term and one interest rate.
For example:
Plus, you now havemore timeto pay off your equipment loan and short-term loan.
This is a possibility with business loan consolidation.
However, it can still be worthwhile if youre looking to pay less each month overall.
Business Debt Consolidation vs.
When you have several business loans, all with different terms, managing repayment can get complicated.
Just likepersonal debt consolidation, business debt consolidation usually offers lower interest rates.
If you qualify, you could end up with a business loan interest rate as low as 5%.
Youre swapping expensive debt for more affordable debt.
Depending on your circumstances, there are also some potential cons to business debt consolidation.
You might not save very much money month-to-month, so the main benefit would be the single payment.
You also could end up stuck with a long-term loan that will cost you much more than you anticipated.
Well cover more business debt consolidation mistakes to avoid a bit later.
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If youre looking to boost your income this month, weve got just the thing for you.
First and foremost, youll need a lender.
For small business consolidation loans, you have several options including banks, the SBA and online lenders.
When your existing loans have been satisfied, your new lender will fully take over ownership of your debt.
Ideally, it will be significantly lower than what you used to owe.
This might include things like vehicles, equipment, real estate and inventory.
Best Lenders for Business Consolidation Loans in 2024
Sifting through business loan consolidation options can be overwhelming.
There are countless lenders, but some are more reputable than others.
Here are a few that stand out in 2024.
One of the best business loan consolidation options is theSBA 7(a).
Interest rates are also low and max out at your base rate + 6.5%.
If your business is in a lower revenue category,Funding Circleis a great option.
It offers consolidation loans up to $500,000 for up to seven years for repayment.
Interest rates start around 15%.
It also has competitive interest rates, starting around 8%.
Loan amounts must total at least $20,000 to apply.
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Look for the best interest rates and ideal terms for your situation, and pay attention to fees.
Using Consolidation as a Short-Term Fix
Business consolidation loans are not a bandage for bad financial decisions.
They are serious, long-term commitments.
