Debt consolidation for a director across three lenders

The situation

This is an anonymised composite reflecting a recurring pattern, not a specific settled transaction. A company director has accumulated debt across three separate sources over a difficult trading period — an outstanding ATO liability, a merchant cash advance taken out for quick working capital, and an unsecured business loan — each with its own repayment schedule, and the combined weekly and monthly obligations are straining the business's cash flow more than any single debt would in isolation.

Why it's hard

Servicing three separate facilities, often with different repayment frequencies and, in the case of a merchant cash advance, a repayment structure tied to daily card sales, makes it difficult for the director to get a clear picture of the business's true cash flow position, let alone plan around it. Each individual lender is also assessing the business in isolation, without visibility into the other obligations, which can mean the true, combined debt burden is higher than any one lender's own serviceability check would catch.

How it can be structured

A consolidation facility, secured by a second mortgage against property equity if available, or structured through a debt restructure and workout lender where the position is more strained, repays all three existing debts and replaces them with a single facility on one repayment schedule matched to the business's actual cash flow; the exit is ordinary servicing of the single consolidated facility going forward. Consolidating typically also removes the daily or weekly repayment pressure a merchant cash advance carries, replacing it with a more standard monthly structure the business can plan around properly. Lenders assessing a consolidation will want a clear picture of all existing debts and their exact payout figures, since the new facility needs to be sized to genuinely clear each one in full at settlement, not approximately.

Merchant cash advances in particular can be difficult to value precisely for consolidation purposes, since their cost is often expressed as a factor rate against future card sales rather than a standard interest rate, and directors should obtain a clear, current payout figure directly from that provider rather than estimating it from the original agreement, which can understate what is genuinely still owed. Consolidation lenders will also want a realistic picture of why the business ended up drawing on three separate, relatively expensive sources rather than a single facility from the outset, since this history informs how the new, consolidated facility should be structured and monitored going forward. Where the ATO component of the debt has any risk of enforcement action attached to it, resolving that element with appropriate urgency, even within a broader consolidation process, should take priority given the director's potential personal exposure. Some directors use a successful consolidation as an opportunity to also establish a more disciplined cash flow management routine going forward, recognising that the accumulation of several ad hoc facilities was itself often a symptom of not having clear visibility over the business's true cash position.

What it typically costs

Pricing reflects the combined risk profile once all three debts are considered together, quoted on enquiry once a lender has reviewed the full debt position and current trading. Costs include an establishment fee, and the total interest cost should be compared honestly against the combined cost of continuing to service all three existing facilities separately.

Timeline

1. Same day — scoping call confirming all three existing debts, their exact payout figures and available security.
2. 3–5 business days — document collection, including payout letters from each existing lender.
3. 5–10 business days — lender matching and submission.
4. 5–10 business days — credit approval and offer.
5. 3–5 business days — settlement, with all three existing debts repaid in full simultaneously.

Questions we'd ask you

1. What are the exact current balances and payout figures for each of the three existing debts?
2. What security, if any, do you have available to support a consolidation facility?
3. What does the business's current monthly cash flow look like once all three obligations are combined?
4. Has the ATO debt element been confirmed as current, or has it moved to any enforcement stage?
5. What caused the need to draw on three separate sources rather than one facility from the outset?

Related

Debt restructure & workout loans · Second mortgages · Directors with ATO debt · Serviceability