Debt consolidation means combining several existing borrowings into a single new facility, so that a business has one repayment to manage instead of many. The aim is usually to simplify finances and, in some cases, to make the overall position more manageable.
Potential benefits
- One repayment to track rather than several.
- A clearer view of what the business owes overall.
- Potentially a structure that fits cash flow better.
The honest cautions
Consolidation is not automatically a saving. Combining borrowings into a longer term can mean paying interest for longer overall, even if each repayment feels smaller. It only makes sense if the total cost and the fit with your cash flow genuinely improve. It is worth doing the maths carefully, ideally with your accountant.
- Compare the total cost before and after, not just the monthly figure.
- Watch out for replacing short-term debt with a much longer commitment.
- Make sure the new facility solves the underlying problem.
Credicorp lends only to UK limited companies and LLPs for business purposes. If you are considering using a Credicorp Flex or Credicorp Slice facility to simplify existing business borrowing, we assess affordability first, and the rate and terms that apply are set out in your offer.
See also: Glossary: forbearance, What is joint and several liability? and Can my company pay ahead to build a buffer?.