Consolidating business debt: when it helps and when it hides a problem

What consolidation does

Debt consolidation replaces several existing facilities with a single new one. You make one payment instead of many, often at a lower blended rate, and free up management time. Done for the right reasons, it can lift monthly cash and improve your cover ratio.

When it genuinely helps

Consolidation pays off when the new facility carries a lower total cost of credit than the debts it replaces, or when replacing several expensive short-term facilities with one cheaper loan cuts the interest bill. Run the pounds, not just the monthly figure.

When it hides a problem

If the only saving is a lower monthly payment achieved by a longer term, you may pay more overall — and if the underlying issue is spending beyond your means, consolidation delays the reckoning. It is a tool for reorganising sound debt, not for rescuing a business that cannot afford what it owes.

Doing it right

List every existing facility with its balance, rate and remaining term; total the cost to run them out; then compare against the consolidation offer's full cost. Only proceed if the numbers genuinely improve. See how to consolidate business debt.

Check the maths

Use the calculator to compare the cost of your current debts against a single consolidated facility.

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