Business Credit Card Debt Consolidation Loans

by Tracy Murray-Crouch

Starting and running a business of any size is a tough thing to do, and the toughest part of it can be figuring how to make the money last from month to month. Long sales cycles, clients who take their sweet time paying outstanding invoices, and vendors who hound you to pay your outstanding bills can all add up to a pretty serious cash crunch. When that happens you have to float the business somehow, and many business owners end up turning to credit cards. This is true in the manufacturing, the retail, and even the construction world.

I recently heard a story of a construction company owner who put about $200,000 on his credit card to float the bills associated with a hotel construction project his company was working on. The hotel developers’ other financing fell through, leaving him with $200,000 to pay off at a very high interest rate.

I happen to know that he’ll be fine, but most small business owners in that situation would be hurting badly, and their only recourse to recover from that kind of business credit card debt would be some form of consolidation loan. The question is do those loans even exist?

Yes, they do, and they operate in a similar way to traditional consolidation loans obtained by individuals, with the same goals. Basically anyone going through this process is hoping to have one lender take all their outstanding debts at various interest rates and combine them into a single loan with one lower interest rate.

Obviously that results in one payment, which is small and more palatable compared to the sum of the payments of the loans and credit cards the business owner was dealing with before the consolidation. The whole process is designed to make it possible for business owners to satisfy the requirements of all their outstanding debt, but do so in a way that keeps them from going out of business or worse, filing for bankruptcy.

Credit card debt consolidation for small businesses is not going to be an easy thing for anybody – you’ll have to qualify for the loan, and the lender will have to believe that your cash flow situation isn’t so bad that you won’t be able to make your consolidation loan payments, the same way you’re struggling with your current payments. If you can show a long track record of sales in your business which gives some proof to the lender that things will get back on track for you, the loan will be much easier to qualify for.

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