Consolidating business debts: compare the full cost

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Debt consolidation replaces several commitments with a new facility. It can simplify administration, but a lower monthly payment does not necessarily mean a lower overall cost.

Start with settlement figures

Request current balances, early repayment charges and security details for every agreement. Include overdrafts and other short-term facilities that you intend to close. Compare the new borrowing against actual settlement figures, not old statements.

Look beyond the monthly saving

A longer term can reduce each instalment while increasing the total paid. Check new fees, guarantees and any assets being offered as security. Be clear whether previously unsecured borrowing would become secured.

Address the cause of the pressure

If operating costs consistently exceed incoming cash, consolidation alone may postpone the problem. Build a forecast showing the new payment and a realistic trading plan. Ask whether old facilities must close at completion and avoid rebuilding balances immediately after they are repaid.

Explore your next step

Contact Milestone Funding to discuss your business and funding needs, or explore the funding options.

Further reading: British Business Bank: finance options.

General information, not a personalised recommendation. Availability, costs and terms depend on the provider and circumstances.