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Glossary

What is Debt Consolidation?

Business debt consolidation means combining multiple existing debts into a single new loan, ideally with a lower overall cost, a longer term or a simpler payment schedule. It is often used to replace several short-term advances or high-interest balances with one more manageable payment. Consolidation can improve cash flow, but extending the term may increase total interest paid. Check for prepayment penalties on existing debts before consolidating.

Example

A business with three short-term loans consolidates them into one term loan with a single monthly payment.

Related funding

Term Loans: A lump sum with fixed payments for big, planned moves.

Related terms

DBA (Doing Business As)Debt Service Coverage Ratio (DSCR)Direct LenderAll terms

Questions about an offer? Your advisor will explain every term.
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