Kiah Treece is a licensed attorney and small business owner with experience in real estate and financing. Her focus is on demystifying debt to help individuals and business owners take control of their finances.
Kiah Treece is a licensed attorney and small business owner with experience in real estate and financing. Her focus is on demystifying debt to help individuals and business owners take control of their finances.
Jordan Tarver is the Deputy Editor for Loans at Forbes Advisor. Before joining Forbes Advisor, Jordan was an editor and writer for multiple finance sites, focusing on loans, credit cards and bank accounts. When he is not working on personal finance content, Jordan is a self-help author and recently released his book You Deserve This Sh!t.
Jordan Tarver is the Deputy Editor for Loans at Forbes Advisor. Before joining Forbes Advisor, Jordan was an editor and writer for multiple finance sites, focusing on loans, credit cards and bank accounts. When he is not working on personal finance content, Jordan is a self-help author and recently released his book You Deserve This Sh!t.
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.
Too much business debt can lead to financial instability, but too little can prevent businesses from growing and expanding. Debt consolidation for businesses can help companies to merge all their debts into one, resulting in a more manageable loan while potentially reducing overall interest payments.
The best business debt consolidation loans offer competitive interest rates, long repayment times and low origination fees. Shop around to choose a loan that helps you accomplish your debt consolidation goals.
Featured Partner Offers
Loan amounts
$5,000 to $250,000
Best Business Debt Consolidation Loans October 2023
Best for Short-term Loans
OnDeck
Why We Picked It
OnDeck was founded in 2006 and has since been a leading provider in the business lending space, offering both term loans and lines of credit. Today, they have extended $14 billion in funding to small businesses.
We picked OnDeck for its variety of business lending products and same-day funding. OnDeck offers a term loan from $5,000 to $250,000 with repayments terms of up to 24 months. You can also access a credit limit of $6,000 to $100,000 through its line of credit with a 12-month repayment term that resets after each withdrawal.
Note: OnDeck does not lend to businesses in Nevada, North Dakota or South Dakota. What’s more, while it lends to over 700 industries, there are some industries it cannot serve.
Pros & Cons
- Term loans from $5,000 to $250,000; lines of credit up to $100,000
- Same-day funding
- Low minimum credit score requirement
- $100,000 minimum annual revenue requirement
- Must have been operating for at least one year
- Does not lend to businesses in Nevada, North Dakota or South Dakota.
Details
Eligibility: Prospective borrowers must have a minimum personal credit score of 625 to qualify for an OnDeck term loan or line of credit. Additionally, their business must have been in operation for at least one year and have annual gross revenue of at least $100,000. Applicants must also have an open business checking account.
Turnaround time: You can apply and receive a decision from OnDeck on the same day. What’s more, approved borrowers also can have their funds in their bank account as early as the day they’re approved.
Best for Small and Large Lines of Credit
American Express Business Blueprint
Monthly fee
Varies by loan term
see below for details
Minimum Credit Score
of at least 660 FICO at the time of application
Monthly fee
Varies by loan term
see below for details
Minimum Credit Score
of at least 660 FICO at the time of application
Why We Picked It
American Express Business Blueprint is best for its American Express® Business Line of Credit (formerly Kabbage from American Express and Kabbage Funding), which gives business owners the chance to secure funding between $2,000 to $250,000 . Repayment terms include six, 12 or 18 months.
Line of credit customers incur a loan fee for each month they have an outstanding balance. Total monthly fees incurred over the loan term range from 3% to 9% for six-month loans, 6% to 18% for 12-month loans and 9% to 27% for 18-month loans.
In addition to its line of credit, American Express Business Blueprint provides other tools beneficial to small business owners, including its own mobile app that provides comprehensive cash flow insights.
Pros & Cons
- Backed by American Express
- No prepayment penalty
- Monthly fees on unpaid balances
- Requires personal guarantee
Details
Eligibility: To be eligible for financing through American Express Business Blueprint, applicants must have a minimum personal FICO credit score of of at least 660 FICO at the time of application, have started your business at least a year ago and have a valid business checking account. Applicants should have an average monthly revenue of at least $3,000. All businesses are unique and are subject to approval and review. The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.
Funding time: Once you complete your loan application and sign the loan agreement, funds are sent to your verified bank account. Funds can take up to three business days to appear in your account, depending on your bank.
Best for Flexible Lines of Credit
BlueVine
Why We Picked It
BlueVine is a financial technology company that provides financing solutions to small businesses nationwide. It specifically specializes in business lines of credit and checking accounts. As of December 2021, BlueVine no longer offers invoice factoring as one of its financing methods.
Small business owners looking to access a line of credit on an as-needed basis can receive funds from $6,000 to $250,000 . BlueVine offers two payment structures: Flex 6 or Flex 12. Customers who choose Flex 6 make weekly payments over 26 weeks while Flex 12 customers make monthly payments over 12 months. What’s more, after 45 days of payment on Flex 6, or 90 days of payment on Flex 12, you may be eligible for a credit line increase.
BlueVine also charges weekly or monthly fees for its line of credit. Standard pricing is 1.7% per week or 7% per month for line of credit draws.
Note: BlueVine’s line of credit is available in most U.S. states except North and South Dakota, Puerto Rico and U.S. territories.
Pros & Cons
- Businesses that have been in operation for at least 24 months are eligible
- Lines of credit up to $250,000
- Low credit score requirement
- No mobile app for its line of credit
- Monthly revenue requirement
- Not available to business in North and South Dakota, Puerto Rico and U.S. territories
Details
Eligibility: Eligibility varies on the specific program a business owner chooses.
Flex 6:
- Minimum personal credit score of 625
- Must have been in business for at least 24 months
- $40,000 per month in revenue or $480,000 annually
- Your business must be a corporation or LLC
- No bankruptcies within the last three years
Flex 12:
- Minimum personal credit score of 650
- Must have been in business for at least three years
- $80,000 per month in revenue or $960,000 annually
- Your business must be a corporation or LLC
Turnaround time: After you submit your application, you can receive a decision as quickly as five minutes. If approved, you’ll receive your funds in your bank account within a few hours if you choose its $15 bank wire option. Choose its free ACH transfer option, and you’ll receive your funds within one to three business days.
Best for Small- to Mid-sized Businesses
National Funding
Why We Picked It
National Funding offers working capital small business loans from $10,000 to $500,000 with terms of four months to two years, paid daily or weekly. Borrowers can use their funds for all working capital needs, including inventory, payroll, marketing, taxes and more. National Funding also offers equipment financing up to $150,000 but applicants must have a minimum personal credit score of 575 to qualify for that financing method.
Unlike most business lenders, National Funding offers early pay-off discounts. Small business loan customers who repay their total remaining balance in full within the first 100 days of the contract will automatically receive a 7% discount off the total remaining balance. Equipment financing customers who repay the total remaining balance early, at any point during the term, will automatically receive a 6% discount off the total remaining balance.
Pros & Cons
- Financing up to $500,000
- Early payoff discounts
- Requires daily or weekly payments
- Potential high borrowing costs
- Requires minimum gross annual sales of $250,000
Details
Eligibility: National Funding recommends a minimum credit score of 600 to qualify for its equipment financing. Your business must also have been in operation for at least six months. National Funding requires minimum gross annual sales of $250,000.
Turnaround time: Most of National Funding’s loans are disbursed within 24 hours of approval. However, this is subject to receipt of required documentation, underwriting guidelines and processing time by your bank.
Best for Quick Approvals
Fundbox
Why We Picked It
Fundbox is an AI-powered business lending platform that speeds up the application, decision-making and funding process. It offers decisions within three minutes and funds as soon as the next business day.
Prospective borrowers have two business financing options through Fundbox. Business owners can apply for revolving business lines of credit up to $150,000 with repayment terms of 12 or 24 weeks. Your available credit goes back up as you repay your line of credit.
Pros & Cons
- Receive a decision within three minutes
- Low minimum credit score requirement
- Next-day funding
- Only short-term repayment terms are available
- Relatively low lines up credit of up to $150,000
Details
Eligibility: Applicants must have a minimum personal credit score of 600 to qualify for financing through Fundbox. The applicant’s business must only be in operation for at least six months, making it a possible option for startups. However, businesses must have at least $100,000 in annual revenue.
Funding time: Whether you’re getting a line of credit, your funds transfer to your bank account as soon as the next business day.
Best for Established Businesses
Funding Circle
Learn More
From participating partners via businessloans.com’s website.
Why We Picked It
Funding Circle has been a direct lender specializing in small business loans since 2010. Since its inception, it has helped 100,000 businesses in 700 industries and lent $15.2 billion globally. We chose Funding Circle because it provides fast, affordable loans with a simple application process and funding in as little as 48 hours. Prospective borrowers have three options: business term loan, line of credit or SBA loan.
Funding Circle term loans range from $25,000 to $500,000 with repayment terms from six months to five years. If you choose to apply for a business line of credit, you can access credit lines between $6,000 and $100,000. However, Funding Circle doesn’t specify its line of credit repayment terms. You can also apply for Funding Circle SBA loans, which range from $25,000 to $500,000 with terms up to 10 years.
There are two main drawbacks of Funding Circle. First, there’s a one-time origination fee on each loan ranging from 3.49% to 6.99% of the approved loan amount. Second, due to state lending regulations, Funding Circle does not lend to businesses that operate out of Nevada, making it available in only 49 of the 50 U.S. states.
Pros & Cons
- Loans up to $500,000
- Funding in as little as 48 hours
- No minimum annual revenue requirement
- One-time origination fee between 3.49% to 6.99% of the approved loan amount
- Requires two years in business
- Not available for Nevada businesses
Details
Eligibility: The minimum qualifications for a loan through Funding Circle are:
- Two years in business
- Minimum personal credit score of 660
- No personal bankruptcies amongst the business owners within the last seven years
- Not located in Nevada, due to state lending regulations
SBA loans, however, require two years in business, a minimum credit score of 650, a minimum annual revenue of at least $400,000, no current federal tax liens and that your business operates in one of the SBA’s eligible industries.
Turnaround time: Depending on the financing method you apply for, you can receive your funds within two to three days. However, SBA loans may take several weeks due to long underwriting turnaround times, which typically take up to three weeks.
Summary: Best Business Consolidation Loans of October 2023
Tips for Comparing Business Debt Consolidation Loans
When considering business debt consolidation loans, evaluate offers from multiple lenders to ensure you get the best possible deal. Here are a few tips to help you compare business debt consolidation loans:
- Evaluate qualification requirements. In addition to considering the borrower’s credit score, business lenders often require applicants to demonstrate a minimum time in business—usually six months to a year but sometimes up to two to three years. Likewise, lenders look at annual revenue to evaluate a borrower’s ability to repay the loan.
- Consider the interest rate and fees. Annual percentage rates (APRs) encompass a loan’s interest rate and any other fees the lender charges. Business loan APRs vary by lender and the borrower’s qualifications but generally can extend up to 30%. Also compare each lender’s origination fees, as they often hover around 3% to 5% of the loan amount.
- Compare loan terms. The length of the loan repayment term directly impacts how much you have to repay each month, so make sure you choose a repayment schedule that you can afford. The best small business loans typically come with terms between three months and 10 years, but some are available for up to 25 years.
- Shop around. If you already have a relationship with a local lender, inquire about its debt consolidation options. Otherwise, research traditional banks and credit unions as well as online lenders to find the most competitive options.
What Is Business Debt Consolidation?
Business debt consolidation is the process of taking out a new loan to pay off multiple existing debts. Some business lenders offer loans tailored to this while others extend traditional business loans for various purposes. Regardless of the type of loan, debt consolidation can be an effective way to simplify your monthly repayments and reduce the interest you’re paying on your debts.
How Do You Consolidate Business Debt?
To consolidate business debt, take out a new business loan and use the funds to pay off your existing debt from credit cards and other loans. This merges all of your debt into a single loan with one monthly payment, often with a lower interest rate and more favorable terms, depending on your creditworthiness.
There are a few different ways to consolidate business debt, but business debt consolidation loans and balance transfer credit cards are the most common methods.
Business Debt Consolidation Loans
Business debt consolidation loans are available from traditional financial institutions and online lenders. Some lenders specialize in debt consolidation while others extend general business loans that you can use for a variety of purposes.
Depending on the lender, business debt consolidation loans may have lower interest rates than other business loans, making them an attractive option for companies that want to reduce the cost of their debt obligations.
Business Balance Transfer Credit Cards
Business balance transfer credit cards involve transferring the balances of existing business credit accounts onto a new credit card with a lower interest rate. As with consolidation loans, this can be an effective way to reduce the cost of your debts—especially if you qualify for a 0% APR introductory period. To take advantage of these benefits, you must repay the entire debt balance before the 0% interest period ends, and you may have to pay a balance transfer fee.
Pros and Cons of Business Debt Consolidation Loans
Before consolidating your business loans, consider the pros and cons of doing so:
Pros of Business Debt Consolidation
- Reduced interest costs: Business debt consolidation results in a single loan payment and possibly a lower interest rate for qualified borrowers. Depending on the new interest rate and repayment term, this can reduce the amount of interest you’ll pay over the life of the loan.
- Simplified monthly repayments: Consolidating business debt can simplify your repayment by combining all your existing debts into one single loan. Streamlined payments also make it easier to avoid missing payments, which can damage your credit score and undermine your business.
- Improved cash flow: Depending on your business’ cash flow needs, you may be able to invest the money you save on interest payments into your business. Alternatively, lower monthly payments can free up cash to cover other expenses.
Cons of Business Debt Consolidation
- Extended repayment terms: Consolidating several loans into one may mean a longer repayment term to keep your payments manageable. While this results in lower monthly payments, it means interest will accrue over a longer period, and you may pay more in interest over time.
- Rates may not be lower: Many borrowers access more competitive interest rates by consolidating their high-interest debts. However, this is not always the case.
- Fees increase the cost of borrowing: Many lenders charge origination fees, and balance transfer credit cards often charge fees equal to around 3% to 5% of the balance. These costs can eat into savings from a lowered interest rate.
- Lower credit score: Beyond financial costs, taking out a new loan can cause a temporary dip in your credit score. However, the inquiry disappears from your credit report after two years. Plus, making on-time loan payments will ultimately improve your score over time.
- Not a cure-all: Consolidating business debts can simplify repayment and reduce costs, but it won’t fix underlying cash flow problems. If your business struggles to make ends meet, speak to a financial advisor before committing to a debt consolidation loan.
How to Get a Business Debt Consolidation Loan
The process of consolidating business debt varies slightly depending on the borrower’s needs and the lender’s requirements. However, here are a few general steps to follow if you want to get a business debt consolidation loan:
- Check your credit score. Check your personal credit score to ensure it’s high enough to qualify for competitive interest rates. If you have an established business, it may have its own credit score, too. Otherwise, lenders will use your personal credit score to evaluate your eligibility and determine what interest rate you qualify for. Generally, you need a credit score of around 625 to qualify, but keep in mind that the lowest interest rates are reserved for borrowers with higher scores.
- Shop around. Where possible, take advantage of prequalification tools that let you see what rate you are likely to qualify for without a hard credit inquiry.
- Submit a loan application. Once you find a loan you’re eligible for with a lender you like, complete an application online or in person (if applicable). Lender requirements vary, but most require copies of the business’ financial documents, tax returns and other materials. Depending on the age of the business, you may need to provide your personal tax returns as well.
- Await approval. Approval times depend on the lender and the complexity of your loan application. Some lenders offer same-day approval times while others can take seven business days or more. Keep the process on track by monitoring your application status and immediately responding to requests from your loan officer.
- Consolidate debts. If you’re approved, the lender will have you sign the loan agreement before disbursing the funds into your business bank account. Funding speeds vary, but some lenders advertise that you could get your money in as few as 48 hours. Use the cash to pay off your other business debts and begin payments on the new loan. In some cases, the lender may pay third-party creditors directly.
Find the Best Small Business Loans of 2023
Alternatives to Business Debt Consolidation Loans
If you’re looking for alternatives to consolidating your debt, refinancing and restructuring debt are other ways to manage what you owe.
Business Loan Refinance
Business loan refinancing can consolidate your debt, but its main function is to offer you a new loan with better terms, such as a lower interest rate. If your credit score or business revenue rises and market rates decrease, refinancing might help you secure a better rate and lower payments, saving you money.
Refinancing may also shorten or lengthen your loan term so you can pay off debt faster or bring payments down to a manageable level. In some cases, you can do a cash-out refinance on a commercial property loan to draw cash from equity.
Nonetheless, there are potential upfront costs, like origination fees or appraisal fees. Your current lender may also charge a prepayment penalty if you pay off the old loan early.
Restructure Your Business Debt
Restructuring debt is a way to adjust your existing loan terms by negotiating with your lender. This may be a viable option if your business is struggling to keep up with debt repayment.
For example, debt restructuring could lower your interest rate, extend your loan term or reduce your balance. A debt-for-equity swap is another type of restructuring agreement that could eliminate all or some of your debt and give the lender a stake in your company.
Methodology
We reviewed 27 popular lenders based on 16 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the best lenders based on the weighting assigned to each category:
- Loan cost: 35%
- Loan details: 25%
- Customer experience: 20%
- Eligibility and accessibility: 10%
- Application process: 10%
Within each major category, we also considered several characteristics, including available loan amounts, repayment terms and applicable fees. We also looked at minimum credit score and time in business requirements and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like online applications, prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
To learn more about how Forbes Advisor rates lenders, and our editorial process, check out our Loans Rating & Review Methodology.
¹The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.
Frequently Asked Questions (FAQs)
Are business debt consolidation loans worth it?
Whether debt consolidation loans are worth it for your business depends on several factors. For some, the most important consideration is potential savings on interest payments—and how these balance loan origination fees. If the interest savings are significant and fees are low, a debt consolidation loan may be a good option for your business.
Also, consider how much you can afford each month and ensure you’re comfortable with the new payment amount. Speak to a financial advisor if you’re unsure whether taking out a debt consolidation loan is the best strategy.
Can I get an SBA loan to consolidate debt?
The U.S. Small Business Administration (SBA) offers several different types of loans that can be used to consolidate business debts, including the popular 7(a) loan program. These loans offer attractive interest rates and terms, making them an excellent option for businesses looking to reduce the cost of their debts.
Note, however, that not all companies are eligible for an SBA loan, and the approval process can be lengthy. Check your eligibility and organize the necessary financial documents before applying.
What is the downside to consolidating debt?
One of the most significant disadvantages of consolidating business debt is that you may pay more overall. Although you may qualify for a lower interest rate, this is not guaranteed. You still have to repay the full debt amount plus the loan origination fee and other costs. Depending on the new loan term, interest also may accrue over a longer period, resulting in a higher overall cost of borrowing.
Does a business consolidation loan hurt your credit score?
Applying for a debt consolidation loan may involve a personal credit inquiry if the loan requires a personal guarantee. If the credit check is a hard inquiry, it could impact your credit score. If you default on a business loan with a personal guarantee, that can also negatively affect your personal credit.
How can I get out of business debt fast?
Businesses may get out of debt faster by making advanced loan payments. Reducing operating expenses, increasing product or service prices and collecting money for unpaid invoices are possible ways to raise cash for extra loan payments. Be aware that lenders may charge prepayment penalty fees on business loans if you repay them early.
Next Up In Business Loans
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