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.
Here are 7 business debt consolidation loans
| Lender | NerdWallet Rating▼ | Max loan amount▼ | Min. credit score▼ | Next steps |
|---|---|---|---|---|
OnDeck - Online term loan with Fundera by NerdWallet | 5.0/5 Best for Fast business debt consolidation loans | $250,000 | 625 | with Fundera by NerdWallet |
Fora Financial - Online term loan with Fundera by NerdWallet | 4.5/5 Best for Business debt consolidation loans for bad credit | $1,500,000 | 570 | with Fundera by NerdWallet |
Funding Circle - Online term loan with Fundera by NerdWallet | 4.5/5 Best for Long-term business debt consolidation loans | $500,000 | 660 | with Fundera by NerdWallet |
Accion Opportunity Fund - Small Business Working Capital Loan | 5.0/5 Best for Unsecured business debt consolidation loans | $250,000 | 570 | Read Review |
SBA 7(a) loan with Fundera by NerdWallet | Best for SBA business debt consolidation loans | $5,000,000 | 650 | with Fundera by NerdWallet |
Bank of America Business Advantage Secured Term Loan | 4.5/5 Best for Bank business debt consolidation loans | Undisclosed | 700 | Read Review |
TAB Bank - Term loan | Best for Low-interest business debt consolidation loans | $300,000 | 660 | |
Here are 7 business debt consolidation loans
Best for Fast business debt consolidation loans
Best for Business debt consolidation loans for bad credit
Best for Long-term business debt consolidation loans
Best for Unsecured business debt consolidation loans
Best for SBA business debt consolidation loans
Best for Bank business debt consolidation loans
Best for Low-interest business debt consolidation loans
TAB Bank
Max Amount
$300,000
Min. Credit Score
660
I'M INTERESTED IN:
Our pick for
Fast business debt consolidation loans
OnDeck offers fast funding on term loans — the same day in some cases — along with flexible qualification requirements.
OnDeck - Online term loan
Max Loan Amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly
Max loan
$250,000
Min. Credit score
625
Apr range
27.20-99.90%
Our pick for
Business debt consolidation loans for bad credit
You may be able to qualify for a loan from Fora Financial with a minimum credit score of 500 or higher and at least six months in business.
Fora Financial - Online term loan
Max Loan Amount
$1,500,000
Min. credit score
570
Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing or young but established small businesses looking for speedy financing.
Max loan
$1,500,000
Min. Credit score
570
Our pick for
Long-term business debt consolidation loans
Funding Circle offers loans with repayment terms up to seven years. You can receive funding in as little as two days.
Funding Circle - Online term loan
Max Loan Amount
$500,000
Min. credit score
660
Est. APR
15.22-45.00%
Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
May fund quickly
Max loan
$500,000
Min. Credit score
660
Apr range
15.22-45.00%
Our pick for
Unsecured business debt consolidation loans
Accion Opportunity Fund offers business debt consolidation loans that don’t require physical collateral.
Accion Opportunity Fund - Small Business Working Capital Loan
Max Loan Amount
$250,000
Min. credit score
570
Est. APR
8.49-24.99%
Accion is a good option for businesses that haven't been able to secure traditional financing. The lender targets its funding efforts toward minority, women and low-to-moderate-income entrepreneurs.
Max loan
$250,000
Min. Credit score
570
Apr range
8.49-24.99%
Our pick for
SBA business debt consolidation loans
The most popular of the SBA loans, 7(a) loans offer long-term, flexible financing — although they are slow to fund.
SBA 7(a) loan
Max Loan Amount
$5,000,000
Min. credit score
650
Est. APR
11.50-15.00%
7(a) loans are issued by private lenders and backed by the SBA. They offer long repayment terms and low interest rates.
Lowest interest rate
Max loan
$5,000,000
Min. Credit score
650
Apr range
11.50-15.00%
Our pick for
Bank business debt consolidation loans
Bank of America offers secured business loans that require collateral, but can be used for a variety of purposes, including business refinance.
Bank of America Business Advantage Secured Term Loan
Max Loan Amount
Undisclosed
Min. credit score
700
Bank of America offers secured business loans with repayment terms up to four or five years — depending on the type of collateral you provide.
Max loan
Undisclosed
Min. Credit score
700
Our pick for
Low-interest business debt consolidation loans
TAB offers competitive interest rates and long repayment terms, and it can fund faster than other traditional lenders.
TAB Bank - Term loan
Max Loan Amount
$300,000
Min. credit score
660
Est. APR
8.99-35.99%
TAB Bank offers competitive interest rates for business owners with strong credit — and can sometimes fund faster than an SBA loan.
Max loan
$300,000
Min. Credit score
660
Apr range
8.99-35.99%
What is a business debt consolidation loan?
A business debt consolidation loan allows you to pay off existing loans and other debts with one new loan. These loans may help you access a lower interest rate, as well as streamline and reduce your monthly payments.
Lowering your interest rate can potentially save you money, depending on how long it takes you to pay off your loan. Similarly, reducing your monthly payment can free up cash flow, giving you more funds to spend on other business necessities.
🤓 Nerdy Tip
Business debt consolidation loans are different from debt refinancing — although the two are sometimes confused. Typically, the goal of refinancing a business loan is to get a new loan with more favorable terms to pay off an existing loan. It’s not to combine multiple debts into one loan, as is the case with a debt consolidation loan.Types of business debt consolidation loans
Several types of business loans can be used for debt consolidation. Here are a few options:
Bank loans
Loans from traditional banks typically offer the most competitive rates and terms. Bank business loans can be difficult to qualify for, however, requiring several years in business and excellent credit. Secured business loans, like Bank of America’s Business Advantage Secured Term Loans, may be easier to qualify for because fixed assets are pledged to back up repayment. Bank loans can be slow to fund.
SBA loans
If you can’t qualify for a bank loan, SBA loans are a great alternative, 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 a little easier to qualify, but SBA lenders still usually require good credit and multiple years in business. And, like bank loans, SBA loans can be slow to fund.
Online loans
These loans may be a good option for newer businesses or those with fair or bad credit. For example, Fora Financial requires that businesses only be in operation for
6
months and have a minimum credit score of 570
.Although online business loans typically have flexible qualification requirements, this flexibility can result in higher interest rates and shorter repayment terms. These loans tend to fund much more quickly than bank and SBA loans, however, often in days.
Nonprofit loans
Nonprofit lenders offer loans 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. For instance, Accion Opportunity Fund’s small-business working capital loan can be used to consolidate business debt among other things.
Pros and cons of business debt consolidation loans
Pros
By combining multiple existing debts into a single loan, it can be easier to manage your finances and loan payments. Instead of having to make several payments to different lenders, you make one payment to one lender every month.
Although this isn’t always the case, you may be able to secure a lower interest rate and decrease the interest costs on your debt.
Sometimes a debt consolidation loan can result in a lower monthly payment and can help free up cash that you can use to cover day-to-day expenses. A lower payment may be due to a lower interest rate, smaller loan amount or longer loan term.
In some cases monthly cash flow can be improved as a result of a lower monthly payment or by paying off loans that require daily or weekly payments.
Cons
Although longer repayment terms can lower your monthly payment and make repaying more manageable, you will be accruing interest over a longer period of time and could end up paying more in interest over the course of the loan.
When you apply for business debt consolidation, you’re not guaranteed to receive a loan with lower interest rates than what you’re paying now. If you can’t access better rates, a consolidation loan may not be the right option for your business.
You may have to pay additional fees when taking out a debt consolidation loan — which can affect the potential money you save by consolidating. Your existing lenders may charge prepayment penalties for repaying early and you may also have to pay an origination fee on your new loan.
How to consolidate business debt
The process of business debt consolidation will vary based on your existing debt, business qualifications and lender, among other factors. Here are a few steps to help you get started:
1. Determine how much you owe
You should start by determining the total debt you owe, including existing loan balances, repayment terms and interest rates. Also note whether any of your current loans have prepayment penalties if you pay off the balance before the end of the loan term.
2. Evaluate your qualifications
Knowing your debts and the interest rates associated with each loan will help you determine which loans make sense to consolidate.
Lenders use your personal credit score, business credit score, time in business and annual revenue to see whether you qualify for a loan. They may also consider additional factors such as your cash flow, sales projections and collateral.
Although some online lenders are willing to work with borrowers who have low credit scores, you’ll get the most competitive rates and terms with a credit score of 650 or higher.
3. Compare business debt consolidation options
As you look at different business debt consolidation loans, you’ll want to research multiple lenders to see what they offer and compare factors such as:
- Interest rates.
- Repayment terms.
- Additional fees.
- Funding speed.
- Application process.
- Customer service.
It’s important to consider the benefits and drawbacks of any potential loan options as they compare to your current debt obligations. For example, a loan with a longer repayment term may provide lower monthly payments, but you may be paying more interest in the long run. If lowering your monthly payment is your top priority, however, this may be a tradeoff you’re willing to accept.
4. Gather documentation and apply
The business debt consolidation loan application process will vary from lender to lender. In general, however, you’ll need to provide:
- Basic information about you and your business.
- Personal and business bank statements.
- Personal and business tax returns.
- Business financial statements.
- Existing business debt schedule.
After you submit your documentation, the lender will reach out if it needs additional information to underwrite your application.
5. Sign loan documents and pay off existing debts
If approved for a loan, you’ll be asked to sign the business loan agreement. You should review it thoroughly and reach out to your lender if you have questions or need clarification on any of the terms.
You may receive loan funds directly to pay off your existing debts or, in some cases, the lender may handle the payment of your debts. You’ll want to discuss the repayment processes ahead of time with your lender and also get details about when your first loan payment is due.
Alternatives to business debt consolidation loans
If you don’t qualify for a business debt consolidation loan or feel that it’s not the best option for your business, here are some alternatives:
- Business loan refinance. If you can’t roll all your business debt into a single loan, refinancing one or more loans individually may be a good alternative. Some banks, like Bank of America, have business term loans that can be used to refinance equipment, vehicles or real estate. Like a business debt consolidation, you’ll want to make sure the refinance will meet your goal whether that's a lower interest rate, lower monthly payment or something else.
- Using a debt payment strategy. If consolidating or refinancing isn’t possible, employing a debt payment strategy may be an option. If reducing the number of your debts is your priority, focus on paying more towards the debt with the smallest balance while making minimum payments on the others. After that debt is paid off, move to the next smallest debt. If your priority is to reduce the amount of interest you’re paying, focus on paying more towards the debt with the highest interest rate while making minimum payments on the others. After that debt is paid off, focus on the debt with the next highest interest rate.
- Restructuring a business loan. If you are finding it difficult to make monthly debt payments, you can reach out to your lenders to see if it is possible to restructure your loans or possibly make interest-only payments for a set period. While restructuring a business loan will typically affect your credit score, it’s likely to do less damage than defaulting on the debt.
» MORE: How to refinance a business loan
Former NerdWallet writer Jackie Zimmermann contributed to this article.
Last updated on May 15, 2024
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.
Wondering if you qualify?
It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.
Learn more
Frequently Asked Questions
Yes. When you get a business consolidation loan, you combine several existing loans into one new loan, simplifying your monthly repayment schedule.
It depends on the loan program. SBA 7(a) loans, the primary business loan program of the agency, can be used to pay off existing business debt. However, SBA microloans and 504 loans can’t be used to consolidate debt.
Business debt consolidation loans may be worth it if you can qualify for a lower interest rate or better repayment terms. These loans may also be worth it if you’re having trouble managing multiple debt obligations and would benefit from just one loan.
When you apply for a business consolidation loan, the lender will likely perform a hard credit pull that can temporarily ding your credit score. If you make timely repayments, however, a business consolidation loan can help you build your credit — as long as the lender reports your payment history to the consumer and/or commercial credit bureaus.
On the other hand, if you don't make payments and your lender reports to the credit bureaus, this can hurt your credit score.