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Best Business Debt Consolidation Loans
Consolidating business debt with a lower-interest business loan can boost your cash flow by lowering your monthly payment and shortening your repayment period.
Rosalie Murphy covers small business topics for NerdWallet. Previously, she led editorial strategy for a local news startup and covered business at The Desert Sun. She holds a journalism degree from the University of Southern California.
Robert Beaupre leads the SMB team at NerdWallet. He has covered financial topics as an editor for more than a decade. Before joining NerdWallet he served as senior editorial manager of QuinStreet's insurance sites and managing editor of Insure.com, and as an online media manager for the University of Nevada, Reno.
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A business debt consolidation loan lets you replace multiple loans with just one loan. Consolidating your business debt can help shorten your repayment periods, reduce your monthly payments or both.
The higher the interest rate on your existing debt, the more money a debt consolidation loan can help you save. Simplifying your debts can help you stay on top of your payments and put less stress on your cash flow, too.
As with most small-business loans, established businesses with strong finances typically qualify for the lowest rates and longest repayment periods on business debt consolidation loans. If you’re a newer business or have less well-established credit, an online lender may be a better fit than a traditional bank.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
NerdWallet's ratings are determined by our editorial team. The scoring formula takes into account the type of card being reviewed (such as cash back, travel or balance transfer) and the card's rates, fees, rewards and other features.
NerdWallet's ratings are determined by our editorial team. The scoring formula takes into account the type of card being reviewed (such as cash back, travel or balance transfer) and the card's rates, fees, rewards and other features.
NerdWallet's ratings are determined by our editorial team. The scoring formula takes into account the type of card being reviewed (such as cash back, travel or balance transfer) and the card's rates, fees, rewards and other features.
NerdWallet's ratings are determined by our editorial team. The scoring formula takes into account the type of card being reviewed (such as cash back, travel or balance transfer) and the card's rates, fees, rewards and other features.
NerdWallet's ratings are determined by our editorial team. The scoring formula takes into account the type of card being reviewed (such as cash back, travel or balance transfer) and the card's rates, fees, rewards and other features.
NerdWallet's ratings are determined by our editorial team. The scoring formula takes into account the type of card being reviewed (such as cash back, travel or balance transfer) and the card's rates, fees, rewards and other features.
With business debt consolidation, you combine several loans or merchant cash advances into one loan. Ideally, your new loan will have a lower interest rate, lower payments, a shorter repayment period or all three.
Business debt consolidation differs from debt refinancing. When you refinance a loan, you’re replacing one loan with a different loan, usually with a lower interest rate or more favorable terms. With debt consolidation, you’re replacing several different loans with one loan.
To consolidate your business debt, you’ll start by figuring out the total amount you owe on all the loans you want to consolidate.
Next, you’ll take out a new loan — that’s your debt consolidation loan — that is at least as large as what you owe. You can use many different business term loans to consolidate business debt, including bank loans, online loans and some SBA loans.
Then, you’ll use your debt consolidation loan to pay off your existing loans.
After that, you’ll only have to make payments on your debt consolidation loan instead of multiple debts.
Are debt consolidation loans worth it?
Business debt consolidation loans can be worth it if:
One or more of your existing loans has a high interest rate and you can qualify for a lower one.
One or more of your existing loans has terms that aren’t ideal for you, like frequent repayments or a short repayment timeline, and you can qualify for better terms.
You’re struggling to stay on top of your different debt obligations and would have an easier time with just one loan.
Comparing your business debt consolidation options
When shopping, note that you have lots of business loan options when it comes to consolidating your debt. There are some loan types, like SBA microloans, that can’t be used for paying existing debts. But many other business term loans can. Don’t limit your search to loans marked explicitly for debt consolidation.
Generally, business loans from banks offer the most competitive rates and terms. But these loans can be difficult for many small businesses to qualify for. Banks often require that you have multiple years in business and excellent credit (a score above 720), and they can be slow to fund.
If you can’t qualify for a bank loan, SBA loans are a great alternative, offering low interest rates and long repayment terms. These loans can be a little easier to qualify for, although SBA lenders — typically banks and credit unions — still usually require good credit (a score between 690 and 719) and multiple years in business. However, like bank loans, SBA loans can also be slow to fund.
Online business loans may be a good option for newer businesses or business owners with fair credit (a score between 630 and 689). They may come with higher interest rates and shorter repayment terms than banks, but they can be easier to qualify for. They also tend to fund much more quickly than bank and SBA loans, sometimes in a matter of days.