Best Business Debt Consolidation Loans
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What is a business debt consolidation loan?
Types of business debt consolidation loans
- Bank business loans typically offer the best rates and terms, but can be slow to fund and difficult to qualify for, requiring several years in business and excellent credit. A secured business loan may be easier to qualify for because secured loans are backed by assets you use as collateral. This means that if you fail to repay the loan, the lender may repossess those assets to cover its losses.
- SBA loans are a great alternative to bank loans, offering competitive interest rates and long repayment terms. The 7(a) loan program is the SBA’s primary business loan program and can be used to refinance current business debt. Because these loans are partially guaranteed by the U.S. Small Business Administration, it can be easier to qualify, but SBA lenders still usually require good credit and multiple years in business. Like bank loans, SBA loans can be slow to fund.
- Online business loans may be a good option for newer businesses or those with fair or bad credit. Although they typically have flexible qualification requirements, expect higher interest rates and shorter repayment terms. These loans tend to fund much more quickly than bank and SBA loans.
- Nonprofit loans are designed to benefit low-income and underserved communities that can be a good option for women, minority and veteran business owners. These organizations may provide a range of loan options and how the funds can be used varies by lender. Nonprofits also typically offer business training, coaching and other support services.
Best business debt consolidation loan options
Pros and cons of business debt consolidation loans
Pros
Instead of having to make multiple daily, weekly or monthly payments, a single loan can improve cash flow by requiring only one regularly scheduled payment.
Can result in a lower monthly payment due to a lower interest rate, smaller loan amount or longer loan term.
Cons
Longer repayment terms can result in more total interest paid over the course of the loan.
You may have to pay additional fees when taking out a debt consolidation loan.
Your existing lenders may charge prepayment penalties for repaying early.
How to consolidate business debt
1. Determine how much you owe
2. Identify which loans to consolidate
3. Evaluate your qualifications
4. Compare options
- Interest rates.
- Repayment terms.
- Additional fees.
- Funding speed.
- Application process.
- Customer service.
5. Apply
- Basic information about you and your business.
- Personal and business bank statements.
- Personal and business tax returns.
- Business financial statements.
- Existing business debt schedule.
6. Sign loan documents and pay off existing debts
Is a business debt consolidation loan worth it?

senior writer covering small business
How to compare business debt consolidation loans




What to do if you can’t get a business debt consolidation loan
Refinance your business loans
- Pro: Refinancing loans individually could result in a lower interest rate or a lower monthly payment.
- Con: Because you’re not consolidating debt, you’d continue to make multiple payments each month to different lenders.
Create a debt payment strategy
- Pro: The number of lenders you pay each month or the amount of interest you pay will be reduced over time.
- Con: The existing interest rates and monthly payments will remain the same until you pay off the loans.
Restructure your business loans
- Pro: You may be able to lower the interest rate on the loan, extend the loan term, reduce the loan amount or pause payments for a period of time.
- Con: Restructuring a business loan will usually affect your credit score, but will likely do less damage than defaulting on the debt.
Frequently asked questions
Can you get a business loan to consolidate debt?
Can an SBA loan be used as a debt consolidation loan?
Does a business consolidation loan hurt your credit score?
Article sources
Methodology
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including:
Transparency of rates and terms.
Flexible payment options.
Fast funding times.
Accessible customer service.
Reporting of payments to business credit bureaus.
Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.