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June 15, 2023

How to Consolidate Business Debt

Reasons to consider taking a loan to pay for a vacation

As a business owner, your goals are to maintain a successful operation, to increase productivity, to expand—and to manage any factors that may put your objectives at risk.

Take your debt, for example.

If you have business credit cards, loans, and other types of commercial financing, you’re likely managing different payment amounts, due dates, and interest rates. And following multiple rate hikes, your budget may have gotten leaner—to the point that you feel like you don’t have the capital to develop new ideas and grow.

This is a perfect example of when you can use a debt consolidation loan strategically to simplify your finances and take your business to the next level.

 

How does debt consolidation work?

Business credit cards and other types of financing are standard ways to cover expenses—until monthly debt payments start to become a hindrance to your business’ ability to expand.

That’s when you can take out a debt consolidation loan to pay off all or part of your existing debt and get a new financial solution with better terms, namely one fixed interest rate and a longer repayment period, if preferred.

Here’s an example to show how it works.

Save roughly $7,465 on interest when you use a debt consolidation loan off of a $110,000 loan

Image is an example only and does not reflect actual customer information.


Let’s say you have two credit cards with a total principal of $40,000 and 25% average annual interest rate. In addition, you have a $70,000 business loan with 15% annual interest rate and a 3-year repayment term.

You owe a total of $110,000, not including interest.

In this scenario, you would need to pay $4,025 a month for 3 years to bring the balance down to zero, and you would pay $34,916 in interest during that time.

A business debt consolidation loan for the same principal amount ($110,000) and the same repayment term (3 years), with a fixed interest rate of 15%, can help you save $7,465 on interest over the course of the loan.

If your immediate focus is on the affordability of your monthly payments, you may choose to extend your repayment period.

In the same example, consolidating your debt into a 12-year loan will decrease your monthly payment from $4025 to $1657

 

What is the benefit of consolidating your debt with an extended-term loan?

Lower monthly payments are primary benefits of an extended-term debt consolidation. By reducing your monthly debt payments, you will have more capital available to put back into your business.

Taking it one step further, the right lender not only allows you to pay off debt but also provides additional funds that could be used to:
 

  • Automate and streamline your operations
  • Diversify your offering and expand your client base
  • Invest in cybersecurity to protect your company and customers

 
An additional benefit of debt consolidation is that it simplifies your finances. If your current debt consists of multiple credit cards, loans, and other lines of credit, debt consolidation gives you one loan with a fixed interest rate, due date, and low monthly payment. That means you can spend less time trying to manage your debt and more time focusing on your business.

What are the advantages of consolidating business debt with BHG Financial?

 

With so many options to choose from, it can be difficult to determine which is the right lender for your financing needs. To make things easier, we’ve created a quick comparison.

business-debt-consolidation

BHG Financial provides loans up to $500,0001,2 so that you can pay off debt and invest additional funds into your business. Plus, our longer repayment terms of up to 12 years1 give you affordable monthly payments.

If you’re in the market for a financial solution that serves your unique needs, we offer full customization with flexible options. And we can fund you faster than traditional lenders so that you can make a strategic decision for your business, efficiently.

Our concierge support team is available 7 days a week to guide you through our streamlined lending process. You can get started online today by viewing your monthly payment estimate here.


¹ Terms subject to credit approval upon completion of an application. Loan sizes, interest rates, and loan terms vary based on the applicant's credit profile. Finance amount may vary depending on the applicant's state of residence. Call for complete program details.

² BHG Financial business loans typically range from $20,000 to $250,000; however, well-qualified borrowers may be eligible for business loans up to $500,000.

For California Residents: BHG Financial loans made or arranged pursuant to a California Financing Law license - Number 603G493.



No application fees, commitment, or impact on personal credit to estimate your payment.