Managing small business debt and loan consolidation: A practical guide
Journey Capital TL;DR: Debt can help your business grow, but unmanaged or excessive debt can strain your cash flow and limit your options. This guide explains how to take control of your small business debt and when consolidation might help simplify payments, reduce costs, and get your business back on track.
Debt shouldn’t hold your business back
Most small businesses carry some form of debt. When managed strategically, debt can help you invest, expand, and smooth out your cash flow. However, if your debt is spread across multiple lenders or repayment becomes a challenge, it can start working against you. Here is how to regain control and how consolidation could make things easier.
Understanding small business debt
Businesses borrow in many ways, and each financing product serves a different purpose:
- Term loans provide fixed payments over a set period.
- Lines of credit offer flexible access to funds when you need them.
- Merchant cash advances, also known as Flex Funds at Journey Capital, feature variable repayments tied to your sales.
- Credit cards are often used for short-term or emergency expenses.
Signs your debt needs attention
- You have multiple loans with different interest rates and terms.
- It’s hard to track payment due dates or you’re missing payments.
- Cash flow is tight because of high monthly repayments.
- You’re using one loan or credit product to pay off another.
Smart debt management strategies
Review all your debts
List every loan or credit product, including lender name, product type, remaining balance, interest rate, monthly payment, and end date.
Prioritize high-interest debt
Focus on paying down the loans or credit lines that cost you the most over time.
Align payments with cash flow
If your revenue fluctuates, look for repayment schedules that match your business cycles.
Talk to your lenders
If you’re falling behind or need flexibility, reach out. Some lenders offer repayment programs or can restructure your terms.
What is loan consolidation?
Loan consolidation means combining multiple debts into a single loan with one monthly payment. Ideally, the new loan offers a better rate or more manageable terms.
Benefits:
- Easier to manage with one payment
- Potential to reduce total interest
- May improve cash flow
- Might lower your monthly payment
Risks:
- Longer terms can mean paying more interest over time
- Some lenders charge fees for early repayment
- Consolidation does not fix underlying cash flow problems
When should you consider consolidation?
You might benefit from consolidation if:
- You’re juggling multiple loans across different lenders
- Your credit or business health has improved since you took on earlier debt
- You want to free up cash flow for growth
- You’re spending too much time managing repayment schedules
Our approach to debt management
We offer flexible term loans and credit options that may help consolidate your existing business debt. Our team works with you to understand your cash flow and goals, helping you choose a solution that reduces complexity and supports your growth.
FAQs
Yes. Depending on the lender, term loans, lines of credit, and merchant cash advances can often be combined into one new product.
There may be a small short-term impact, but over time, consolidation can improve your credit by simplifying repayment and lowering your credit utilization.
You may still qualify. Some lenders, including Journey Capital, consider factors beyond your credit score.
Compare your total repayment across all current loans to the repayment amount of the new consolidated loan. An advisor or online calculator can help.
Possibly. We can review your current debt and may be able offer financing options (based on eligibility) to simplify repayments and improve cash flow.
Trying to simplify your debt and free up cash flow? Apply online to see what financing options you are eligible for.