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A Step-by-Step Plan for Restructuring Your Business Debt

According to a 2019 Small Business Credit Survey conducted by the Federal Reserve Banks, 70% of small employer firms had outstanding debt last year – and then 2020 rolled in. Due to the changes that have taken place over recent months and the continued uncertainty, many businesses (if not most) are scrambling to figure out how to manage day-to-day costs, preserve their financial goals and manage existing business debt.

For many, the answer is coming up with a plan to restructure business debt. If you’re not familiar with how this process works and think it might be a solution for you, this information will help you get started.

Ways to Restructure Business Debt

There are three main strategies you can use to get your business’ debt under control: refinancing, consolidation and restructuring.


Refinancing business debt is exactly as it sounds. It means taking out a new loan to pay off existing business debts. This might include refinancing business credit cards, a merchant cash advance or a single loan, for example. The main benefit of choosing this route is the ability to lock in a lower interest rate. It also allows you to combine multiple debts into one.


Similar to refinancing, consolidation allows you to combine multiple debts into a single loan. However this option doesn’t always lower the interest rate on the total balance. The goal of this type of financing is to make debt management simpler by having just one monthly payment. If you have several merchant cash advances, for example, you can consolidate them to have a single monthly payment at a fixed interest rate.


With restructuring business debt, the aim is to review your existing debt and then work with your creditors to secure more favorable payment terms. A lender might be willing to temporarily reduce your interest rate or payments on your credit card, for example. Or, if you have a business debt significantly past due, you might be able to negotiate a settlement for less than what’s owed.

Top Financing Options to Overcome Business Debt

In some cases, you may still need to seek additional financing to boost cash flow, improve your position and manage business debt. Here are a few of your best options:

  •   Term loan – A business term loan allows you to borrow a lump sum of money, which has to be repaid within 12 to 18 months (short-term loan) or 5 to 7 years (long-term loan). You can use this option to consolidate or refinance business debts.
  •   Line of credit – Different from a loan, this option provides a revolving credit line you can borrow against on an as-needed basis. Business owners typically use this option to pay off debts other than loans, like money owed to vendors or service providers.
  •   Cash advance – A merchant cash advance provides a quick boost of capital, in as little as 24 hours. It isn’t a loan, but rather an advance based on future credit cards sales. Because you can secure cash so fast, it allows your business to quickly address cash flow issues and manage debts that have spiraled out of control.

If your business needs fast funding and expert support to handle business debt, consider partnering with the team at First American Merchant. As a high risk specialist, we understand the challenges many different business types and industries face. Take advantage of our team’s years of experience and get the support you need to overcome business debt.