Business debt consolidation is the process of rolling your existing balances on loans, merchant cash advances and other debt into a new loan — ideally with a lower rate and better terms. Consolidation can help lower your monthly payments and simplify your finances.
The best options for business debt consolidation are term and SBA loans, since they tend to have the lowest APRs and the longest repayment terms. But other options exist, including reverse consolidation programs, which are used for consolidating high-cost merchant cash advances.
Whichever loan you choose, it’s important to compare your options. Here are some of the top debt consolidation loan picks by category.
If you want to compare multiple debt consolidation loans in one place, consider the Lendio marketplace. Lendio works with 75+ partners and makes it easy to compare multiple lenders with a single application. Compare SBA and term loans, as well as options for consolidating high-interest merchant cash advances (MCAs).
Lendio is highly rated by past customers, who like its fast, streamlined application process. And if you need help, it has loan officers who can explain the options available and help you choose the best debt consolidation loan for your needs. But be prepared to receive a large number of marketing calls and emails.
Loan amount
$1,000 – $10,000,000
APR
Varies by lender
Min. Credit Score
500
If you want to compare multiple debt consolidation loans in one place, consider the Lendio marketplace. Lendio works with 75+ partners and makes it easy to compare multiple lenders with a single application. Compare SBA and term loans, as well as options for consolidating high-interest merchant cash advances (MCAs).
Lendio is highly rated by past customers, who like its fast, streamlined application process. And if you need help, it has loan officers who can explain the options available and help you choose the best debt consolidation loan for your needs. But be prepared to receive a large number of marketing calls and emails.
Pros
Options for bad credit
Multiple loan options available
Large network of lenders
Cons
Not a direct lender
Funding fees apply to your loan
Reverse consolidation can be costly
Loan amount
$1,000 – $10,000,000
APR
Varies by lender
Min. Credit Score
500
Loan term
3 months to 25 years
Requirements
Operate business in US or Canada for 6 months or more, have a business bank account, minimum 520 personal credit score, at least $8,000 in monthly revenue.
Chase is a national bank with term and SBA loans between $5,000 and $500,000 and repayment terms of up to seven years — making them ideal for debt consolidation. But unlike some other banks, it doesn't clearly disclose interest rates and fees, and you can't apply online.
To qualify with Chase, you'll need to be a current business customer and apply at a branch. That said, it states it has competitive rates and is a preferred SBA lender, which may make it a good choice for existing customers who want to consolidate high-interest debt.
Loan amount
$5,000 – $500,000
APR
Not stated
Chase is a national bank with term and SBA loans between $5,000 and $500,000 and repayment terms of up to seven years — making them ideal for debt consolidation. But unlike some other banks, it doesn't clearly disclose interest rates and fees, and you can't apply online.
To qualify with Chase, you'll need to be a current business customer and apply at a branch. That said, it states it has competitive rates and is a preferred SBA lender, which may make it a good choice for existing customers who want to consolidate high-interest debt.
Pros
Low minimum loan amounts
SBA preferred lender
Term and SBA loans available
Cons
Not upfront about costs
Must apply at a branch
Must be an existing customer
Loan amount
$5,000 – $500,000
APR
Not stated
Loan term
12 to 84 months
Requirements
Hold a Chase business checking account, have a realistic business plan and visit a Chase location in person.
SBA business loans are partially backed by the government, with repayment terms of between six and 25 years and can be used for debt consolidation. But due to their strict eligibility criteria, they may be harder to qualify for and may take longer to process than term loans through banks and online lenders.
Compared to other lenders, Huntington National Bank has some of the nation's highest approvals for SBA loans. It offers SBA 7(a), 504 and Express loans with down payments as low as 10% and loan amounts up to $5,000,000. It's a preferred SBA lender with a team of dedicated SBA loan specialists who can make final decisions on most SBA loans instead of having to wait on the SBA.
Loan amount
$5,000 – $5,000,000
APR
Varies
SBA business loans are partially backed by the government, with repayment terms of between six and 25 years and can be used for debt consolidation. But due to their strict eligibility criteria, they may be harder to qualify for and may take longer to process than term loans through banks and online lenders.
Compared to other lenders, Huntington National Bank has some of the nation's highest approvals for SBA loans. It offers SBA 7(a), 504 and Express loans with down payments as low as 10% and loan amounts up to $5,000,000. It's a preferred SBA lender with a team of dedicated SBA loan specialists who can make final decisions on most SBA loans instead of having to wait on the SBA.
Pros
SBA preferred lender
Offers SBA 7(a), 504 and Express loans
High number of approvals compared to other lenders
Cons
No SBA Microloans
Mixed customer reviews
Loan amount
$5,000 – $5,000,000
APR
Varies
Loan term
Up to 300 months
Requirements
Meet the SBA requirements for a government-backed loan
If you're an existing BofA customer with good credit, Bank of America may offer some of the lowest rates available. If you're looking to consolidate debt, its Business Advantage Term loan offers fixed rates as low as 8.5%, and you could save an additional 0.25% to 0.75% with BofA's relationship discounts.
To qualify, you need a minimum FICO score of 700, at least two years in business and a minimum annual revenue of $100,000. But its documentation requirements may be higher than with an online lender, and turnaround times may be slower. And for loans over $50,000, you'll need to work with a dedicated specialist at the bank.
Loan amount
$10,000 – $100,000
APR
Starting at 8.50%
Min. Credit Score
700
If you're an existing BofA customer with good credit, Bank of America may offer some of the lowest rates available. If you're looking to consolidate debt, its Business Advantage Term loan offers fixed rates as low as 8.5%, and you could save an additional 0.25% to 0.75% with BofA's relationship discounts.
To qualify, you need a minimum FICO score of 700, at least two years in business and a minimum annual revenue of $100,000. But its documentation requirements may be higher than with an online lender, and turnaround times may be slower. And for loans over $50,000, you'll need to work with a dedicated specialist at the bank.
Pros
SBA Preferred lender
Potential for reduced rates
Full suite of business banking products
Cons
Origination fee of $150
Pattern of customer complaints
Mixed customer reviews
Loan amount
$10,000 – $100,000
APR
Starting at 8.50%
Min. Credit Score
700
Loan term
12 to 60 months
Requirements
Good credit, 2+ years in business, $100,000+ revenue
Funding Circle is an investor-backed lending platform that's invested over $20 billion in 135,000 businesses worldwide. It offers debt consolidation with its business term loan, which offers repayment terms of up to five years and fixed monthly payments.
As an alternative fintech lender, the company specializes in fast turnaround loans. You could get approved in minutes and funds as soon as 24 hours after submitting documents. But it charges an origination fee between 4.49% to 10.49%.
Loan amount
$25,000 – $500,000
APR
starting at 7.49%
Min. Credit Score
660
Funding Circle is an investor-backed lending platform that's invested over $20 billion in 135,000 businesses worldwide. It offers debt consolidation with its business term loan, which offers repayment terms of up to five years and fixed monthly payments.
As an alternative fintech lender, the company specializes in fast turnaround loans. You could get approved in minutes and funds as soon as 24 hours after submitting documents. But it charges an origination fee between 4.49% to 10.49%.
Pros
Investor-backed funding
No prepayment penalties
Quick, streamlined application
Cons
5% of missed payment fee
Five-year term on debt consolidation loans
Origination fee applies
Loan amount
$25,000 – $500,000
APR
starting at 7.49%
Min. Credit Score
660
Loan term
6 months to 7 years
Requirements
660+ credit score, 2+ years in business, operates in an approved industry, no bankruptcies in the past 7 years.
Our lending experts analyze dozens of business loan providers to narrow down the best options for business owners. We weigh lenders against 12 key metrics:
Application process
Credit score minimums
Customer service reviews
Eligibility requirements
Extra features
Fees
Funding turnaround times
Lender reputation
Minimum and maximum loan amounts
Products offered
Rates
Willingness to work with risky industries
We also search for lenders that cater to a range of needs, including those that work with bad credit and newer business owners.
How to compare debt consolidation business loans
Here are the top things to keep in mind when comparing business debt consolidation loans:
APRs. With debt consolidation, the goal is to pay off your existing debts with a loan that has a lower rate than your existing loans. Compare multiple lenders and loan types to ensure you get the lowest possible APR.
Repayment terms. When choosing a debt consolidation loan, consider the repayment term. Longer terms typically offer the lowest monthly payments, which can make budgeting easier, but you’ll pay more interest over the long run.
Origination fees. Some lenders charge an origination fee from 0.05% to 10% on their loans, especially if you have lower credit. This fee affects your total APR, so compare APRs across loans, not just the interest rate on offer.
Other fees. Many borrowers complain about “hidden” fees, so be sure to read over your loan agreement to find out if you’re responsible for any prepayment penalties, late fees and monthly admin fees.
Funding times. Funding times can vary widely by lender. Online, alternative lenders tend to have faster turnaround than traditional banks and credit unions. If you need funds immediately, consider a short-term business loan.
Customer support options. Trying to consolidate debt may feel challenging, especially if you have a lot of high-interest loans you’re trying to pay off. Consider a lender with a dedicated support team to walk you through your options.
Customer reviews. When evaluating a lender, it’s a good idea to read reviews on sites like Trustpilot and the Better Business Bureau (BBB) website to learn about previous customers’ experiences with a company.
What is a business debt consolidation business loan, and how does it work?
With a business debt consolidation loan, you pay off multiple existing loans and credit cards with a new loan with better rates or terms. This can help you get out of debt sooner while reducing your monthly payments at the same time.
The best loans for debt consolidation are term and SBA loans, since they tend to offer the most competitive rates and longest repayment terms. You would apply for these loans just like any other business loan, qualifying based on your business revenue, credit score and time in business.
After the loan is approved and funded, you pay back the loan in fixed monthly payments composed of principal and interest. You may also have the option of paying it off before the term is up. Check if prepayment penalties apply to your loan.
Pros and cons of debt consolidation business loans
Here are the main pros and cons of debt consolidation loans to help you decide if it’s the right choice for your business.
Pros
Save on interest. Small business owners may need to take on high-interest debt during the first few years. But once you’ve established yourself, you could snag a lower interest rate and pay less overall interest with a new business loan.
Lower your monthly payments. If you took out a merchant cash advance or other short-term loan with daily or weekly repayments, taking on a new loan could mean a lower APR and lower monthly payment — which is the best way to preserve cash flow.
Simplify your payments. Instead of having to keep track of and make multiple loan payments every month, debt consolidation allows you to roll all your debt into a single loan and a single repayment every month.
Access more credit. If you have a business credit card or line of credit, consolidating your debt can free up your credit limits. This can be useful for businesses with solid revenue and cash flow. But be careful of doing this, as it increases the debt your business has to repay.
Boost your credit score. Business debt consolidation may help increase your credit score by showing a positive payment history and restructuring your business debt. It can be bad in the beginning, though — when you pay off accounts, your credit score may take a hit before it gets better.
Cons
Origination fees may apply. Some lenders charge origination fees on their loans, and SBA loans may require a hefty down payment. Prepayment penalties could also apply. Make sure the costs of debt consolidation are worth the benefits.
Total debt won’t change. Debt consolidation can make managing your payments easier, but it won’t change the amount you owe. Debt consolidation only shifts your creditor, not your outstanding balance.
Potentially higher cost. Lengthening your loan term might lower your monthly payments, but it also increases the total cost of your loan. The best debt consolidation loans have a lower interest rate to make your debt more affordable.
Personal guarantee required. Almost every business loan requires a personal guarantee from the owners. This means you’re responsible for paying off the debt if your business can’t. Make sure your business can afford it before you put your personal finances at risk.
Types of debt consolidation business loans
Here are the most popular types of business loans used for debt consolidation.
Type
Typical loan amounts
Typical term lengths
Long-term loan
$5,000 to $2M
2 to 10 years
Short-term loan
$5,000 to $500,000
1 to 3 years
SBA loan
Up to $5M
6 to 25 years
How to qualify for debt consolidation of loan
To qualify for a debt consolidation loan, you’ll need to meet the lender’s revenue, credit score and time in business requirements. While every lender is different, be prepared to meet the following criteria:
At least one year in business
A personal credit score 670 or higher
At least $50,000 in annual revenue
Because a new debt consolidation loan is adding to your existing debt load, the lender will need to verify you can handle the new payment based on your revenue and cash flow.
How to apply for a business debt consolidation loan
Applying for a debt consolidation loan is similar to other business loans. You’ll need to prepare your application, compare lenders and ensure your budget can handle the new payment after you consolidate.
Determine the loan amount. Go over your debts and get the total payoff amount for each. This is the amount you need to borrow. Next, calculate the amount you’ll pay with a new loan. If it’s higher than what you’d pay each lender individually, it may not be worth it.
Check your business and personal credit score. Your credit scores determine which lenders you can work with and the APR you’ll qualify for. But even with bad credit, you may still qualify for a debt consolidation loan.
Compare and consult lenders. Banks and larger online lenders are a good place to start your search. Confirm that debt consolidation is an option. Some may restrict businesses from using their funding to pay off other debts.
Gather your documentation. Required documents typically include bank statements, tax returns, financial statements and other documents. You may likely need to provide a personal guarantee as well.
Submit an application. Fill out the full application and upload the required documents or link to your financial accounts. Be sure to review the application for accuracy before submitting to avoid delays in processing. You can check out no or low-doc business loan options if you’d prefer to skip a lengthy application process.
Review and finalize your loan. If you’re approved, review your loan documents and confirm that your loan makes financial sense. It should reduce the total cost or lower your monthly payments. Check for any hidden fees or prepayment penalties.
Budget for new loan payments. Finally, adjust your budget to account for a new single monthly payment. Although business debt consolidation can improve your finances, you’ll need to make one large payment versus multiple smaller ones.
Taking out a new business loan isn’t the only way to consolidate high interest business debt. Consider these alternatives:
Personal loan. Some lenders may let you use a personal loan for business expenses. Personal loans aren’t dependent on your business revenue or time in business, making them ideal for newer businesses that may not qualify for a business loan.
Home equity loans or HELOCs. If you own a home with at least 20% equity, a home equity loan or HELOC may be a cheaper borrowing option than a business loan or credit card. But if you can’t keep up with the payments, you could risk losing your home.
Rollover for business startups (ROBS). A ROBS is a tax loophole that allows your business to access funds in your retirement account without penalty if it’s the right type of corporation. To qualify, you need at least $50,000 in your account. But you could face heavy fines with a ROBS — so consider hiring a professional if you go down this route.
Where can I find a debt consolidation loan?
Loans for debt consolidation are available from traditional banks, credit unions and online lenders. While banks and credit unions tend to have the lowest rates — especially if you’re an existing customer — online marketplaces like Lendio, Lendzi and Biz2Credit have multiple lender relationships, which could help you snag a good deal.
How to prequalify for a business loan
Prequalification involves answering a series of questions about yourself and your business to determine your eligibility before you formally apply for a loan.
Here are the general steps:
Visit the lender’s website and fill out the prequalification form.
Provide information about yourself and your business.
View your loan options and compare offers.
Once you’ve narrowed down your options based on your prequalification offers, you can formally apply for a loan with the lender of your choice.
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Anna Serio was a lead editor at Finder, specializing in consumer and business financing. A trusted lending expert and former certified commercial loan officer, Anna's written and edited more than 1,000 articles on Finder to help Americans strengthen their financial literacy. Her expertise and analysis on personal, student, business and car loans has been featured in publications like Business Insider, CNBC and Nasdaq, and has appeared on NBC and KADN. Anna holds an MA in Middle Eastern studies from the American University of Beirut and a BA in Creative Writing from Macaulay Honors College at Hunter College, CUNY. See full bio
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Anna has written 178 Finder guides across topics including:
Kat Aoki was a personal finance writer at Finder, specializing in consumer and business lending. She’s written thousands of articles to help consumers make better decisions on their home loans, bank accounts, credit cards, cryptocurrency and more. Kat is well versed in working with leading brands in the real estate, mortgage and personal finance industries, and her expertise has been featured on Forbes Advisor, Lifewire and financial comparison sites like iSelect and realestate.com.au. She holds a BS in business administration from California State University, Sacramento and enjoys hiking and yoga in her spare time. See full bio
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Kat has written 184 Finder guides across topics including:
BHG Money is a nonbank lender that offers investment, debt consolidation, startup and healthcare-related loans to licensed professionals. Borrow up to $250K with minimal requirements.
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