Two products get sold under the word consolidation in this market, and they are opposites. Knowing the difference before signing is worth more than any rate quoted on the call.
A funder deposits new advance money into your account on a schedule that covers your existing daily debits, and you make 1 payment to the new funder that is smaller than the debits it covers. It feels like relief. Look at the balance sheet the day after funding: every original position is still alive, still accruing, still secured, and a new obligation now sits on top of them. The total owed went up. The instrument is another advance, engineered to feel like a rescue.
A collateral backed facility, underwritten on equipment, receivables, real estate, or business assets, pays every position off in full at closing. Payoff letters are collected, the positions are retired at par, and the liens release. The daily debits stop the day it funds. What remains is 1 monthly payment and a balance sheet a bank can read, which is what makes the next facility, and eventually bank credit, reachable.
Ask them in order. Are my existing positions paid in full at closing, and will you show me the payoff letters? Is new advance money entering my operating account? What collateral secures the new facility? What does my balance sheet look like the day after funding? A reverse consolidation fails the first question every time, and the seller's answer to it tells you everything about the product.
Citadel Ridge reads files for a living. Send yours.