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Best Small Business Debt Consolidation Loans

Almost every business owner will at some point have to take out a loan to finance their goals. Many may also have to work with multiple lenders to achieve those goals. Sometimes, making multiple monthly payments and keeping up with different deadlines can start to take up a lot of time — a precious commodity in the entrepreneurial world. In other cases, borrowers might find that they’re eligible for loans with lower rates than what they have with their original loans. That’s where debt consolidation comes in. 

Can you consolidate business debt?

If you’re an owner working with multiple lenders and investors, it’s quite possible that you’ll at some point consider consolidating your debts. This is possible, if you’re able to qualify for one large loan that can combine all or some of your other debts into a single payment.  

Does debt consolidation affect credit score?

Debt consolidation can boost your credit score as long as you’re able to make regular, timely payments. 

How business debt consolidation loans work

Consolidation vs Refinancing

Pros:

  • Refinancing lowers the overall interest rate of loans
  • Possibility of reduced fees and more flexible repayment terms with refinancing

Cons:

  • With refinancing, you’re still working with multiple lenders
  • Refinancing may increase the overall cost of the loan, even if the interest rate looks lower

Benefits of consolidation over refinancing

With consolidation, borrowers are combining multiple payments into just one single payment, reducing the overall time spent keeping up with deadlines and also potentially reducing the cost of the loan. While refinancing just lowers the cost of the loan and keeps borrowers working with multiple lenders, consolidating costs actually pays off other debtors directly, giving borrowers more of a chance to boost their credit score. 

» MORE: Small Business Loan Refinancing

Is a debt consolidation loan a good idea?

Consolidating debts can be a good idea if you’re able to find one, larger loan to pay off multiple loans and reduce the overall cost of the debt. Borrowers who had to take out one or multiple high-interest loans in a pinch could be interested in this option.

Pros:

  • Turns multiple payments into one, single payment
  • Can help credit score as long as payments are made on time and in full
  • Can reduce overall cost of debts
  • Potential for more flexible, longer repayment terms 
  • Potential for direct payment to creditors

Cons:

  • Depending on interest rates and repayment terms, borrowers may end up paying more for their debt consolidation in the long run than they would have by paying off their original debt
  • Repaying the entirety of the debt may still be difficult if the business has taken out more loans than it can afford
  • If timely payments aren’t made, accessing other forms of financing may become more difficult

How do I combine all debts into one payment?

Before consolidating your debts, you should understand just how much debt you have so that you can find a lender that can provide you access to enough funding to cover those payments. Once you’ve crunched those numbers, you’ll want to find a bank that not only gives you access to the cash that you need, but also offers the option to pay creditors directly or allows you to use the funds to consolidate debt. Once you’ve found the right lender for your business, it’s time to send in an application and sign on the dotted line. 

Best business debt consolidation loan options

Fundation

Best For: Fundation is best for established small businesses that are looking to finance projects such as major renovations, vehicle purchases or debt consolidation. 

Pros:

  • Wide range of loans, with products ranging between $20,000 and $500,000
  • APRs as low as 8%
  • Quick to fund, with cash becoming available within just one to three business days

Cons:

  • Potential for APR as high as 30%
  • Short maximum repayment terms of just four years
  • Difficult for small businesses to qualify
  • Repayments made every two weeks instead of once a month

Credibility Capital

Best For: Credibility Capital is best for low-risk borrowers with high credit or high annual revenues, who are looking for a short-term loan and are able to repay large loans within three years or less. 

Loan Amount:$10,000 – $350,000
APR Range:8.00% – 25.00%%
Time to Fund:Typically 7 days
Loan Term:Up to 3 years
How To Qualify:680+ Personal Credit Score
$250,000+ Annual Revenue
Great Option For:Borrowers With Good Credit
Short & Medium-Term Financing
Click “Check Rates” to apply to Credibility Capital

» MORE: Credibility Capital Business Loan Review

Pros:

  • Loans available between $50,000 and $400,000.
  • APR starting at just 10%
  • Faster time to fund than traditional banks, with cash becoming available within seven days on average
  • No prepayment fee
  • Holistic view of application
  • Autopay option

Cons:

  • Difficult for borrowers with poor or average credit to qualify
  • Maximum repayment terms of three years
  • UCC-1 filing requirement
  • Possibility of personal guarantee requirement
  • Slower time to fund than any of its online business loan competitors

LendingClub

Best For: LendingClub is a great choice for borrowers across a range of credit scores and financial qualifications, who aren’t quite sure which lenders they’ll qualify with. This service allows applicants to submit one form and gain access to multiple offers. 

Loan Amount:$5,000 – $300,000
APR Range:9.77% – 35.71%
Time To Fund:As quick as 2 days
Loan Term:One to five years
How To Qualify:620+ Personal Credit Score
$50,000 Annual Revenue
Great Option For:Good Personal Credit
Works With All Entities Including Sole Proprietors
Click “Check Rates” to apply to LendingClub

» MORE: LendingClub Business Loan Review

Pros:

  • APR as low as 9%
  • Flexible loan terms, with repayment terms of up to five years
  • Quick to fund, with loans becoming available within two days to two weeks
  • Easier to qualify for borrowers with average credit scores
  • One application gives access to several different lenders

Cons:

  • UCC-1 lien requirement for loans above $100,000
  • Potential for higher APR than with a traditional business loan, with rates ranging between 9% and 35.7%
  • Maximum loan amount of $300,000 is lower than many other business loan providers

SmartBiz

Best For: SmartBiz loans are great for established, high-credit businesses that are looking to save some time and effort off of the Small Business Administration (SBA) application process. With low-interest loans ranging between $30,000 and $350,000, their products can help business owners finance medium and large-sized projects and assist with debt consolidation. 

Loan Amount:$30,000 – $350,000
APR Range:9.7% – 11.04%
Time To Fund:As soon as 7 days
Loan Term:10 Years
How To Qualify:675+ Personal Credit Score
$100,000+ Annual Revenue
Great Option For:Borrowers With Good Credit
SBA Loans
Click “Check Rates” to apply to SmartBiz

» MORE: SmartBiz SBA Loan Review

Pros:

  • Rates starting at just 9.7%, with a maximum of 11.04%
  • SmartBiz loans have a shorter funding time than a traditional SBA loan
  • Amounts of up to $350,000
  • Funding possible within weeks

Cons:

  • SmartBiz adds its own fees on top of normal SBA loan fees
  • SmartBiz loans take longer to fund than many other online business loans of similar amounts
  • Borrowers must meet both SBA and SmartBiz requirements
  • Difficult for new businesses or borrowers with low credit to qualify

Funding Circle

Best For: Funding Circle loans are best for businesses with a high annual revenue, who are able to wait for more than a few days to gain access to funding. Their loans can be used for major renovations, repairs and vehicle purchases in addition to debt consolidation. 

Loan Amount:$25,000 – $500,000
APR Range:4.99% – 26.99%%
Time To Fund:10 days on average
Loan Terms:One to five years
How To Qualify:660+ Personal Credit Score
No Minimum Annual Revenue
Great Option For:Established Businesses, Not Sole Proprietors
Click “Check Rates” to apply to Funding Circle

» MORE: Funding Circle Business Loan Review

Pros:

  • Wide range of loans, with products ranging between $25,000 and $500,000
  • Flexible loan terms between one and five years
  • No minimum annual revenue requirement
  • Faster application and funding process than a standard SBA loan

Cons:

  • Slower to fund than other online lenders, with most loans funding within an average of 10 days
  • Difficult for new businesses to qualify, with a minimum of two years in business required to qualify

Conclusion

Consolidating debts can simplify your business finances, turning multiple payments into just one and giving your business more time to repay the loans. However, it can also drastically increase the cost of borrowing in some cases and can negatively impact your credit score if you’re not able to make regular, timely payments. Before diving into any debt consolidation, make sure that the loan you are choosing will actually help your finances, not hurt them. 

DISCLAIMER
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