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Business debt consolidation provides a solution to your business loan debt. It simplifies the loan repayment process and also reduces the interest rate. But this also means people will have to pay off their debts longer, which can eat into savings and even increase prices. Because of the easy monthly payments, business loans can be worth it, especially if you qualify for better terms. These tips help you decide if this is the best option for managing your significant debt. On that note, let’s explore more about business debt consolidation.

What is business debt consolidation?

If a business has a lot of loans, business debt consolidation is a good option for them. When companies consolidate business debt, they replace existing loans with a single loan. It can lower your monthly payments, shorten your repayment period, or both.

Business owners with loans with higher interest rates can save the most by consolidating their business debt into a single loan. But there may be better options for some small business owners. Not all mergers keep margins, offer better rates, or solve financial problems.

Also, not all lenders are suitable. New businesses and those without a good credit history may find online lenders a better option. However, well-established firms with a long history will get the best interest rates and most extended repayment terms from traditional banks.

Business debt consolidation companies

Consolidation business loans are available from traditional banks and other online business lenders. Online lenders generally have better availability and faster funding times than banks, but banks will offer lower interest rates and better terms.

Some lenders offering joint venture business loans that can provide financing for your business. These include:

Chase Bank

Chase is a smaller bank that offers $5,000 business loans that can be utilised for debt consolidation. Tracking periods range from 12 to 84 months, and rates are fixed or adjustable but are not published online. Large national banks will pay annual interest rates between 2.54% and 4.19% in fixed monthly payments.

Most banks require comprehensive information from applicants and may review documents such as your bank statement, credit accounts, business plans, and financial statements.

Credibility Capital

Credibility Capital may be suitable for running a small business with good credit. Not only does this lender charge no application or payment fees, but they also have a variety of loans available.

Business Loan

To get a business loan from Credibility Capital, the business must have been in operation for at least two years, have a good credit score and be profitable. Business owners who want to borrow money from these lenders also cannot file for bankruptcy (business or personal) within the last five years.

Funding Circle

Funding Circle or Finance Circle is an online lender that provides loans between $25,000 and $500,000 for business loans. Maturities range from 6 to 84 months with monthly repayment plans.

Money Circle does not publish interest rates but does provide a loan calculator to help you estimate the cost of financing. According to the calculator, a $150,000 loan with a 24-month term would have an APR of approximately 6%, which includes Funding Circle’s lending rate of 4.49%-10.49%.


The APR, loan terms and the amount you receive from SmartBiz depend on the type of loan you apply for. For example, SBA loans range from $30,000 to $5,000,000, while bank loans range from $30,000 to $350,000.

If you’re looking for a lower cost when consolidating your business debt, an SBA loan from SmartBiz may be ideal. However, SmartBiz borrowers must have a credit score of at least 660 points.

OnDeck Capital

Suppose a business is looking for a short-term business loan or would like to explore a loan with OnDeck Capital. These lenders offer short-term business loans of 18 to 24 months. This period is shorter than many other commercial loans on the market.

OnDeck also has one of the lowest loan amounts ($5,000), although its credit limit has reached $250,000. Therefore, this may not be suitable for businesses looking to consolidate large amounts of debt.

To be considered eligible for a business loan, OnDeck requires the following:

  • You must have been in business for at least one year.
  • Personal FICO score must be at least 625
  • Annual income of at least $100,000
  • Owns an accounting business

How to calculate business debt consolidation loan

Debt consolidation loans allow businesses to transfer balances from credit cards, lines of credit, or personal loans. For debt consolidation to be profitable, the repayment period must be shorter than the repayment period of existing debt without a loan. Second, the interest you pay during the repayment period must be lower than the interest you would pay under your current repayment terms. Sometimes, debt financing may seem attractive because its monthly payment is lower than you would pay today. Still, the lower cost is usually due to shifting the loan to a more extended repayment period.

If you owe $20,000 on three credit cards with average annual percentage rates of 22.99%, and you have to pay around $1,047 every month for 24 months to pay off the balance, you will incur approximately $4,603 in interest. Tempo. You would need to repay the debt in the same 24 months if you transferred these credit cards into a low-interest credit card or a loan with an 11% annual return. The monthly payments may total up to $932. As a result, the interest amount is roughly $2,157. At least for the campaign’s duration, the price will be less while using a credit card with 0% interest.

Consolidating three credit cards with an average interest rate of 22.99%
Loan details Credit Cards Consolidation Loan
Principal $20,000 $20,000
Interest % 22.99% 11%
Payments $1,047 $932
Term 24 months 24 months
Bills Paid/Month 3 1
Total Interest $4,603 $2,157

Debt relief program

Consider loan options to get rid of this financial problem. This tool can change the terms or amount of the debt so that it returns to normal.

Debt relief may include:

  • The cancellation of all debts in bankruptcy.
  • Changing your interest rate or repayment plan to a lower rate.
  • Encouraging creditors to accept less than the total amount owed.

There are three options, which are described below in brief.

Debt relief through bankruptcy

There needs to be more point in speaking to a bankruptcy lawyer before embarking on debt settlement strategies. If people can make payments as agreed, there is no point in engaging in debt settlement or management. The initial consultation is usually free, and applicants can move on to other options if they need to be qualified.

  • Chapter 7 liquidation, the most common form of bankruptcy, will wipe out most credit card debt, unsecured personal loans, and medical debt. If you meet the requirements, it can be done in three or four months.
  • It does not cancel any taxes or child support owed, and student loans are unlikely to be forgiven.
  • It damages your credit score, stays on your credit report for up to 10 years, and even tries to repair your credit history. But if you have bad credit, bankruptcy will rebuild your credit faster than trying to repay your loan.
  • If the signatory is used, the commercial paper will make the signatory responsible for all debts.
  • Eight people cannot file Chapter 7 bankruptcy if the debt is unpaid.
  • There is no need for a “judgment certificate”, which means the debtor has no income or property. Creditors can still file lawsuits and obtain judgments, but they cannot collect the debt.

Debt relief through debt management plans

  • Debt management allows unsecured debt (usually credit cards) to be paid in full, often with a reduced or waived fee.
  • Who pays the credit union the monthly fee, which is distributed to borrowers. Credit counselors have long-standing agreements with credit card companies to help customers manage their debt.
  • The credit card account will be closed, and most people will only have a credit card once the program is completed. (Many people still need to achieve them.)
  • Management plans do not affect credit scores, but closing accounts can hurt them. Complete the program and then reapply for the loan.
  • However, missing money may cause the plan to disappear. Choosing an organization accredited by the National Foundation for Credit Counseling or the American Association of Financial Counseling is essential.
  • First, understand the costs and other ways to pay off debt.

Debt relief through debt settlement

  • Debt management allows unsecured debt (usually credit cards) to be paid in full, often with a reduced or waived fee.
  • Debt settlement is a last resort for people who face significant debt but are not eligible to file for bankruptcy or do not want to.
  • Loan companies often require payment to be released to the plan record and the funds deposited into an escrow account. When money accumulates in your account, and you are behind on your payments, all creditors will be called. The fear of not getting anything may cause the lender to accept a smaller offer and agree to refrain from pursuing you for additional fees.
  • Failure to pay an invoice may result in a summons, refined, and possibly legal action against you. Debt payments continue even while you’re still dating. The solution may take months to launch. Depending on the amount of your debt, the process can take years, and continued payments can hurt your credit score.
  • Anyone may face a tax rate on exempt amounts (what the IRS includes as income). The lawsuit may result in damages and liability.
  • Fix your debt or hire a professional. But the debt settlement business is entirely of bad actors. The Consumer Financial Protection Bureau, the National Consumer Law Center, and the Federal Trade Commission have warned consumers in the strongest possible terms.
  • Some of these companies also introduce themselves as loan companies. Not them. Debt consolidation is something anyone can do on their own without damaging their credit.

Charul Nalwaya

Charul is a content marketing professional and seasoned content writer who loves writing on various topics with 3 years of experience. At Tata nexarc, it has been 2 years since she is helping business to understand jargon better and deeper to make strategical decisions. While not writing, she loves listing pop music.