Debt consolidation

If you have multiple loans or lines of credit, you may decide to consolidate the debts into a single, more manageable loan.

You could combine loans from several different providers into a single debt from one lender.

This process could result in a reduction in monthly repayments, and if your credit score has improved since applying for finance, you might also be able to obtain a lower interest rate.

On the other hand, debt consolidation can involve extra fees, and you may end up paying a higher interest rate if your credit score is too low.

In addition, missing repayments on a debt consolidation loan could significantly lower your credit score, and you may be charged additional fees.

The types of loans that can be consolidated include:

Secured loans

For this type of loan, you’ll need to offer collateral, such as property, vehicle, land, machinery or another major asset that your business owns, as security against the amount you want to borrow.

Due to the lower risk for the lender, secured loans are generally cheaper than unsecured loans.

However, applications for secured loans can take longer to be approved, and if you fail to meet the monthly repayments, the lender can reclaim their debt from the asset you’ve put forward as security.

Find out more about secured loans.

Commercial mortgages

This is a loan that involves paying a deposit followed by monthly repayments with variable or fixed interest rates.

Commercial mortgages usually run for between one and 30 years.

The types of commercial mortgages are:

Owner-occupied mortgages

For businesses buying a property for commercial purposes

Commercial buy-to-let mortgages

For businesses intending to rent the property to another business.

To get a commercial mortgage, businesses usually need to provide accounts for at least the past three years and projected trading figures for the future.

Find out more about commercial mortgages.

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Whilst we make reasonable efforts to keep the information in this guide up to date, we do not guarantee or warrant (implied or otherwise) that it is current, accurate or complete. The information is intended for general information purposes only and does not take into account your personal situation, nor does it constitute legal, financial, tax or other professional advice. You should always consider whether the information is applicable to your particular circumstances and, where appropriate, seek professional or specialist advice or support.

Worth knowing

If you have multiple loans, you might be able to consolidate the debts into a single, more manageable loan. This could result in lower repayments and lower interest.

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