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Business debt relief

4 common options — but no one-size-fits-all solution.

Debt can quickly eat into your business's revenue, costing you money and opportunities in the long run. Debt relief may be a valid option to help handle your costs — but working with consolidation and settlement companies is a lengthy process that could damage your business and personal finances.

Types of debt relief available to businesses

There are four types of debt relief typically available to businesses. Each comes with its own benefits and drawbacks, and not every program will suit your business.

Debt settlement

Debt settlement for businesses works similarly to debt settlement for individuals. Your business will work with a specialist or agency that will negotiate on your behalf.

Typically, this means skipping payments and saving up for a single lump sum that's lower than the total amount you owe to the creditor. And it involves some risk: Your business may be sued by your creditor and those missed payments could impact your business's credit history. Both of these may make it harder to qualify for financing in the future.

You can always negotiate directly with your creditors. But because debt settlement companies specialize in negotiating with creditors, it may speed up the process to let a third party handle it.

However, be on the lookout for scams and bad deals. Know what your business can afford, and check that the settlement company is legit before you let it contact any creditor on your behalf.

Debt management

Like debt settlement, debt management allows your business to eliminate a portion of its debt through negotiation. This can be done through a third party or directly. But instead of a lump sum, your business will set up an adjusted repayment plan that may reduce the total amount you owe.

Of all business debt relief methods, this one is less common. But some creditors or collection agencies may be willing to work with your business, especially if it's facing unforeseen financial difficulties because of the coronavirus.

Debt consolidation

If your business frequently struggles with cashflow issues because of sporadic monthly payment for multiple debts, business debt consolidation may be a way of finding relief. With it, your business takes out a single term loan to pay off its outstanding debts, including other term loans, credit cards, lines of credit and short-term loans. This leaves you with a single monthly payment — which could potentially be lower than the total you were paying across multiple loans.

However, a lower monthly payment may mean you pay more in interest if you pick a long loan term. And consolidation won't erase any of your business debt.

It's a tool to help combine and simplify the repayment process. But if your business isn't making enough to handle its current loans, it's unlikely that you'll be able to qualify for debt consolidation in the first place.


Bankruptcy is a last resort for businesses. It can clear your debts, but it's a lengthy and expensive process — and your business may struggle to find financing after bankruptcy.

The type of bankruptcy your business qualifies for will depend on its structure and current debts. After the Small Business Reorganization Act of August 2019, the process has been simplified. And while you will be able to restructure your business and erase some of your debts, bankruptcy is best left for businesses that have exhausted other debt relief options.

If you agreed to be personally liable for your business's debts — common with most loans — you may still be on the hook for those debts after your business finalizes the bankruptcy process.

Should I consider debt relief for my business?

Debt relief could be the right choice for your business if it's struggling to keep up with payments or has multiple short-term loans to handle regular operating costs. This is especially true if your liabilities are eating into your revenue and you've exhausted other ways of paying off debt available to you.

5 alternatives to debt relief

If debt relief isn't immediately available to your business, employ these strategies to help work through large debts:

  • Review your finances. Unbalanced books can lead to quick accumulation of debt. By reviewing your finances, retooling your budget and seeking the help of a professional accountant, you may be able to restructure your business's operational costs and avoid other, more time-consuming debt relief options.
  • Increase revenue. If possible, an increase to your business's revenue can help make large amounts of debt more affordable. Raising prices, offering frequent sales, diversifying your services and following up on invoices are all effective ways to improve revenue.
  • Cut expenses. Make sure your business is efficiently using its space, equipment and inventory. If there is anywhere you can reduce or eliminate an expense, follow through. Doing so will free up cash flow, resulting in more money to pay off your debt.
  • Contact creditors. Your creditors may have hardship forbearance or deferment options. But even if they don't, you may find that they are open to restructuring your debt, lengthening your loan term or temporarily reducing interest to help your business avoid default.
  • Seek personal credit counseling. While it may not have a direct impact on your business, a credit counselor can help you learn important budgeting strategies that could be applied to your business.

See top business loan options

If consolidation is the best path for your business, compare your loan options by entering the loan amount you're looking for along with your time in business, revenue and credit score.

Name Product Filter Values Loan amount APR Requirements

Fora Financial business loans
Finder Rating: 4.1 / 5: ★★★★★

Fora Financial business loans
$5,000 – $500,000
6+ months in business, $12,000+ monthly revenue, no open bankruptcies
Get qualified for funding in minutes for up to $500,000 without affecting your credit score. Best for companies with at least six figures in annual revenue.

Lendio business loans
Finder Rating: 4.75 / 5: ★★★★★

Lendio business loans
$500 – $5,000,000
Starting at 6%
Operate business in US or Canada, have a business bank account, 560+ personal credit score
Submit one simple application to potentially get offers from a network of over 300 legit business lenders.

National Funding business loans
Finder Rating: 4.75 / 5: ★★★★★

National Funding business loans
$5,000 – $500,000
4% to 8%
Be in business at least one year and make at least $150,000 in annual sales. Other loan types have additional requirements.
Working capital loans and equipment financing, some high-risk industries may be eligible.

Fundbox lines of credit
Finder Rating: 4.2 / 5: ★★★★★

Fundbox lines of credit
$1,000 – $150,000
Not stated
6 + months in business, $100,000+ in annual revenue, 600+ credit score
Get flat rate, short-term financing based on the financial health of your business, not your credit score.

Bitty Advance business cash advances
Finder Rating: 2.8 / 5: ★★★★★

Bitty Advance business cash advances
$2,000 – $25,000
Not applicable
$5,000 monthly bank revenue, 6+ months in business, business bank account open 3+ months, 450+ credit score
With APRs in the triple digits, this is best saved as a last resort.

Compare up to 4 providers

Bottom line

Business debt relief is a lengthy process that could damage your credit. But if you're facing a mountain of debt and haven't been able to restructure it, there are options available to help your business get back on track.

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