Quick answer
Business debt consolidation replaces several debts, such as short-term loans, merchant cash advances, credit cards and tax arrears, with one facility on a single repayment. It suits businesses whose combined daily and weekly debits are strangling cash flow. Property-secured consolidation often gives the longest term and the biggest reduction in repayments.
Key points
- Replaces several debts with one repayment
- Most useful when daily debits are draining the account
- Property security usually gives the biggest repayment relief
- Consolidation works best with a plan to avoid restacking
How stacking happens
It usually starts sensibly. A short-term loan to cover a slow month. Then a merchant advance for stock. Then another loan to cover the repayments on the first two. Each one looked manageable alone. Together they take a slice of the account every single day, and the business is working harder just to stand still.
Signs consolidation could help
- Several lenders debit the account daily or weekly.
- You are borrowing to make repayments on other loans.
- Tax arrears are building because loan debits come first.
- Suppliers are being paid late even though sales are steady.
How consolidation works
| Step | What happens |
|---|---|
| List every debt | Balance, repayment, frequency and payout figure |
| Choose the new facility | Unsecured if the total is modest; property-secured if large |
| Pay out the old debts | The new lender or your solicitor settles each one |
| One repayment | A single, predictable amount on a longer term |
Property-secured consolidation, anywhere from $20k to $5m, often makes the biggest difference because interest can be prepaid or added to the loan, giving the business breathing room while it recovers. No valuation is needed before approval.
Avoiding the restack
Consolidation only works if the business stops borrowing short-term to cover gaps. Build a buffer, put tax money aside each week, and if you need flexible funding, use one line of credit rather than new advances. Our guide on loan stacking warning signs explains how to spot trouble early.
If the business is struggling
If debts are larger than the business can realistically repay, borrowing more may not be the answer. Talk to your accountant and consider getting advice early; ASIC has information for directors on insolvency obligations.
An illustrative example
A cafe group with two sites carries an equipment loan, two short-term unsecured loans and a merchant advance taken during a slow winter. Four lenders debit the account on different days, and a BAS has fallen behind because the loan debits always come first. The owners hold equity in their home behind a bank loan.
A second mortgage pays out the short-term loans and the advance, clears the overdue BAS and leaves the equipment loan in place because its terms are fair. Interest on the new loan is added to the balance for the first stretch, so the daily drain stops immediately. The owners use the breathing room to rebuild a buffer and set aside GST weekly.
Questions to ask yourself first
- Is the business profitable once the loan debits are removed?
- What caused the stacking, and has that changed?
- Which existing debts are fairly priced and worth keeping?
- What will stop the business borrowing short-term again?
Map your way out
Enquire in a minute and list what you owe and to whom. No credit check to ask, a human reviews it, and your details stay private. Your details are not sprayed to other lenders. Ask about consolidation.
Frequently asked questions
Will consolidation reduce what I pay?
Often it reduces the repayment each week or month by spreading the debt over a longer term. Total cost depends on the new facility and the term, so compare both.
Can I consolidate an ATO debt with other loans?
Yes. Clearing tax arrears alongside expensive short-term loans is a common consolidation purpose.
Do lenders consolidate stacked merchant advances?
Some do, especially with property security. Unsecured lenders are more cautious when there are several existing advances.
Should I tell my current lenders?
Your new lender or solicitor will arrange payouts. Get written payout figures, including any early repayment costs, before you commit.
Prefer to start now? Enquire here
About 60 seconds. No credit check when you first enquire, and a person who handles unusual deals calls you back.