Editor's choice: SmartBiz
- Large network of SBA lenders
- Low potential APR
- Loans from $30,000-$5,000,000
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Consolidating your business debt involves taking out a term loan to pay off multiple business debts. This could include term loans, credit card balances, merchant cash advances and any other type of business financing you’re repaying. Use the funds from your debt consolidation loan to pay off your existing debts, then you pay off your new loan with new rates and terms.
Debt consolidation can be especially beneficial if your business can qualify for more competitive rates. But you can also use it simply to make it easier to keep track of your business’s cash flow or adjust your monthly repayments.
The main difference between debt consolidation and refinancing is that debt consolidation involves multiple debts, and refinancing only involves one. Refinancing can help you save on interest if your business qualifies for a more competitive rate. But it isn’t as useful if your business has multiple debts that it’s struggling to pay off.
Some lenders use refinancing and consolidation to refer to the same thing — you can use the loan to pay off multiple debts or just one.
|Provider||Minimum Amount||Maximum Amount|
|LendingClub Business Loans||$5,000||$500,000|
|SmartBiz SBA Loans||$30,000||$5,000,000|
|Funding Circle Business Loans||$25,000||$500,000|
|Credibility Capital Business Loans||$25,000||$350,000||Read review|
|Fundation Business Loans||$20,000||$500,000||Read review|
LendingClub is one of the first peer-to-peer lenders to open its virtual doors in the United States. Rather than funding your business loan itself, it connects borrowers with investors. One of the main draws of LendingClub is its client adviser, which can help your business navigate the application process and find the right kind of loan. And debt consolidation is one of its most popular uses.
SmartBiz isn’t a lender but an online marketplace that can connect your business with funding backed by the Small Business Administration (SBA). The SBA sets interest rate caps for most loans it backs, often translating into some of the lowest rates out there.
While SBA loans might come with a mountain of paperwork, SmartBiz helps businesses navigate the complicated forms and can save you some serious time — for a fee.
Funding Circle is another peer-to-peer lender that offers term loans you can use to consolidate your business debt. You might want to pay particular attention to this lender if your business doesn’t bring in enough money to qualify for other debt consolidation loans — it doesn’t have a minimum revenue requirement. It’s also faster than some of its peer-to-peer competitors — you could get approved in as little as 24 hours and get your funds five days later.
Credibility Capital is an online lender and marketplace that connects small and midsize businesses with funding. If your business can’t qualify for in-house funding, Credibility Capital can connect you with partner lenders that could help. There are no fees for paying off your loan early, and your business can get funds in as little as a few business days.
Fundation has won awards for its working capital loans, but you can also use its term loans for debt consolidation. This online lender looks beyond your credit score and revenue to consider other aspects of your business’s finances when determining the cost of your loan. Its notably transparent about rates, terms and fees, plus it has a highly praised customer service team to help you through the entire process.
Debt consolidation isn’t always a good idea. You might be able to benefit from debt consolidation if one or more of the following scenarios applies:
Consolidating your business’s debt can be a useful way to manage its finances. It can cut down on the short- or long-term costs of your loan, help you save by giving you a lower rate and make your monthly payments easier to keep track of. But if your business is really struggling to pay off debt, a debt consolidation loan might not help much.
To learn more about how business financing works and find more lenders, read our guide to business loans.
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