Best Business Debt Consolidation Loans in 2025
Streamline multiple business debt payments into one
Best business debt consolidation loans
Business debt consolidation lenders at a glance
What is a business debt consolidation loan?
A business debt consolidation loan helps you streamline all your existing business debts into one loan with one monthly payment.
Consolidating business debt could help your business save money and free up cash flow. You could potentially lower your interest rate or get more manageable payments.
Types of business debt consolidation
The most common types of business debt consolidation are loans and balance transfer business credit cards.
Business debt consolidation loans
Business debt consolidation typically comes in the form of a small business term loan. These loans can come from traditional financial institutions, like banks and credit unions, or online lenders. Each of these providers may offer a loan specific to debt consolidation or a small business loan that can be used for a variety of purposes, including consolidating debt.
Balance transfer business credit cards
Business balance transfer credit cards allow you to consolidate business debt from multiple credit cards in one place. Most also come with an introductory 0% APR period, which can help you save money on interest charges while you pay down your balance.
Business debt consolidation is different from refinancing business debt. Refinancing allows you to replace a single existing loan with a new one that has better terms, but it doesn’t allow you to combine multiple debts.
How to consolidate business debt
To consolidate business debt, you’ll take out a new business loan and pay off your existing debts, including business credit card and business loan debts.
You’ll be left with one loan and one monthly payment, ideally with better terms than the original ones. Here’s how it works:
1. Find out how much debt you have
Before you can consolidate your business debt, you need to determine how much you owe. Start by gathering a list of any existing debt obligations for your business. Be sure to include the total outstanding balance, repayment terms, interest rate and any prepayment penalties.
Review this information to determine which debts are good candidates for debt consolidation. Then, add up those balances to determine the total amount that you want to consolidate. Once you have this information in hand, you’ll have a better idea of how much you need to borrow.
2. Determine your eligibility
Each lender will set their own business loan requirements, most of which can typically be found on their websites. However, in general, the following metrics will play a role in loan eligibility: credit score, time in business, annual revenue and any collateral or personal guarantee.
Often, your business and personal credit score will have the biggest impact since your score plays a role in both your loan eligibility and the interest rate you’re given. Some lenders on this list will accept scores as low as 570, but borrowers with high credit scores tend to get lower rates.
Use our business loan calculator to estimate how much money you can borrow for your business.
3. Gather your supporting documentation
Next, your lender will likely want to see some supporting documentation along with your loan application. Here’s an overview of what you may need to provide:
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Business plan
Your business plan gives the lender more information about your unique business model. -
Business licenses
Providing copies of your business licenses shows that you’re compliant with local government regulations. -
Tax returns
Showing your personal and business tax returns will give the lender a better sense of your net profit. -
Financial statements
Recent financial statements can help give the lender a better picture of your business’s overall financial health. -
Governing documents
Your governing documents, such as articles of incorporation or bylaws, will give the lender a sense of how your business is run.
4. Compare loan options
After you’ve gathered all your information, the next step is to shop around for a loan. (More on that below.) Shopping around can help you save money on interest charges and help ensure that you select the best loan terms for you.
As a rule of thumb, you’ll want to gather offers from a handful of lenders before making your final decision. Be sure to provide each lender with the same information when applying so that you can make an apples-to-apples comparison once you have the offers in hand.
5. Apply for a loan
Once you’ve landed on the loan offer that works best for you, it’s time to officially apply for the loan. Online lenders will usually allow you to apply via a simple online application, but banks or credit unions may require you to visit a branch in person.
Some lenders have account representatives who can help you pull your loan application together. If your lender doesn’t, consider bringing your application to your local Small Business Development Center (SBDC) for assistance.
6. Close on the loan
As soon as your application has been approved, you’ll receive a copy of your loan agreement. Read over this document carefully so that you understand all the terms and conditions clearly before signing on the dotted line.
Don’t be afraid to reach out to your lender if you have questions about any loan terms.
How to compare business debt consolidation loans
While you’re shopping around for the best loan to consolidate your business debt, here are a few key metrics to keep in mind:
- Interest rate or factor rate: Some lenders may charge a simple interest rate while others use a factor rate. In either case, you’ll want to compare how much you’ll pay in interest charges over the life of the loan.
- Fees: On a term loan, some lenders may charge an origination fee. In contrast, with a business line of credit, you may face a draw fee or monthly maintenance fee. Compare fees to make sure you’re getting the biggest bang for your buck.
- Loan terms: Longer loan terms typically mean lower monthly payments, but you’ll likely pay more in total interest charges over the life of the loan. Shorter loan terms can help you save on interest, but your monthly payment will probably be higher. As a general rule, choose the shortest loan term where you can comfortably afford the monthly payment.
- Funding time: Some lenders offer quick business loans and can have the money in your account as soon as the same business day, while others may take a few days. Decide how soon you need the money before choosing a lender.
- Collateral or personal guarantee: Some loans are secured by an asset, which can help you get a better interest rate. But if you default on the loan, you risk losing your asset. Weigh whether that risk is worth it when comparing lenders.
Pros and cons of business debt consolidation loans
PROS
- Consolidation streamlines multiple debt payments into one.
- Your new loan may come with a better business loan interest rate or loan terms.
- Keeping up with your payments can help improve your credit score.
CONS
- Consolidating won’t erase your debts.
- Taking out a new loan can temporarily ding your credit score.
- Opening up a new loan may come with additional upfront fees.
Frequently asked questions
Yes, it’s possible to take out a debt consolidation loan for your business. In fact, many small business loans can be used for debt consolidation, but some lenders don’t allow it. Check with your preferred lender about any use restrictions before you apply.
Yes, the SBA offers the option to consolidate debt through the SBA 7(a) loan program. However, the SBA doesn’t fund loans directly, so you’ll need to work with an approved lender to apply for this type of business debt consolidation loan.
Any time you open or close a loan or credit card, it can temporarily lower your credit score. That said, as long as you continually make your payments on time, taking out a consolidation loan can actually help you build your credit score over time.
Our methodology
We reviewed more than 15 lenders to determine the overall best five loans to consolidate business debt. To make our list, lenders must meet the following criteria:
- Minimum time in business of six months: Most lenders require at least 24 months in business before granting loan approval, but some of our lenders have time in business requirements as short as just six months.
- Minimum credit score of 500: If you’re looking for a bad credit business loan, some of our lenders accept personal credit scores as low as 570.
- Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and greater options for repayment terms, loan amounts and APR discounts.
- Repayment experience: For starters, we consider each lender’s reputation and business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide any unique perks to customers, like free wealth coaching.
Best business debt consolidation loans summary