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Best Small Business Debt Consolidation Loans For Good & Bad Credit

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Best Small Business Debt Consolidation Loans For Good & Bad Credit

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Business Loans For Debt Consolidation

Borrowing money can help us get ahead, but it can also cause associated problems. Plus, it can be costly. Just as an individual may find themselves in need of debt relief, a business can too. Here’s what you should know about debt consolidation loans. 

What is business debt consolidation? 

Simply put, business debt consolidation is the process of combining your multiple business debts into one larger debt with (hopefully) lower interest rates, longer repayment terms, and or more manageable monthly payments.

The goal of business debt consolidation is to make  life a little easier, and debt more manageable. Managing your businesses debt load can be overwhelming, but stick with the process as it can provide relief. 

Debt Consolidation Lenders

  • OnDeck - Consider OnDeck to consolidate business credit card debt as well as other purposes
  • Fora Financial - This lender is a great option for debt consolidation since no collateral is required, only 6 months in business, however you cannot have any open bankruptcies.

How does business debt consolidation work?

Here are the steps typically involved in the business debt consolidation process:

  1. Identify and gather outstanding debts: The business debits can include loans, lines of credit, and credit cards.
  2. Evaluate consolidation options: Next, you can evaluate the available options for consolidating your business debt. Simplify this action step with MySMBScore. Using the MySMBScore platform, you can get your business credit score, gain valuable insights, and receive  personalized debt consolidation offers.
  3. Apply for consolidation: Once you’ve reviewed your available options with MySMBScore and decided on a consolidation option, you can apply for the business debt consolidation loan.
  4. Pay off existing debt: After applying, you can be approved for the consolidation loan fairly quickly. From there, you can use the funds to pay off the existing debt. In some cases the lender can pay creditors directly to simplify the process. 
  5. Begin making payments on the consolidation loan: You can begin making payments on the new debt consolidation loan. Ideally you’ll have one monthly payment rather than several, assuming you rolled all debts into one loan. 

Can you consolidate business debt?

Too much debt can impact a businesses financial health and cost them a lot of money. If you’re business needs debt relief, consider debt consolidation. It’s similar personal debt consolidation only intended for business use. 

Is business debt consolidation a good idea?

Business debt consolidation can be a great idea in certain situations, but whether it’s the right choice for you and your business depend your unique and personal (or professional) situation. Perhaps as a new business you accumulated necessary credit card debt, but can’t seem to get it paid off. Consider rolling this debt into one loan with  a fixed monthly payment. Can you see how business debt consolidation can help? 

Before diving in, asses your business credit score and do your due diligence. Understand the costs, benefits, and risks involved. 

What are the pros and cons of business debt consolidation?

Business debt consolidation can have both pros and cons. Here are some of the key advantages and disadvantages to consider:


  • Lower interest rates
  • Simplified debt management
  • Improved cash flow
  • Improve credit score 
  • Potential for more favorable repayment terms 


  • Additional fees and charges 
  • Longer repayment terms
  • Potential credit score impact (short-term) 
  • Risk of default 

Can I get an SBA loan to consolidate debt?

Yes, it’s possible to use an SBA loan to consolidate business debt. The Small Business Administration (SBA) offers multiple loan programs that can be used to consolidate business debt, including the SBA 7(a) loan program and the SBA 504 loan program.

The SBA 7(a) loan program is a flexible and popular program. SBA 7(a) loans can offer longer repayment terms and lower interest rates. This approach might be exactly what you’re looking for.

The SBA 504 loan program is designed for financing fixed assets like real estate or larger equipment. It can also be used to refinance existing debt, including high-interest loans.

Gain additional insight for your business credit score and  small business debt consolidation loans through the MySMBscore platform.

What's the difference between consolidating and refinancing business debt? 

Consolidating and refinancing business debt are two approaches you can utilize when managing your business debt. These options can help reduce your monthly payments simplifying your debt management. 

There are a few key differences:

  • Debt consolidation involves combining multiple debts into a single loan, typically with a lower interest rate and longer repayment period. You can make a single monthly payment to the consolidation loan provider.
  • Debt refinancing, on the other hand, involves replacing ONE loan with a new loan. You’re not using refinancing options for multiple business debts. The benefit to refinancing is setting up repayment terms that work better for your business financial needs.

Both debt consolidation and debt refinancing can be effective strategies for managing your business debt, depending on your business needs and circumstances. 

How do you get a business debt consolidation loan?

Getting a business debt consolidation loan typically involves the following actions:

  1. Evaluating your debt. You can start by assessing your current debts and their terms. Review your interest rates, repayment periods, and monthly payments. Identify which debts you want to consolidate and what terms would work for you when setting up you consolidation loan.
  2. Checking your credit score: Your business and personal credit score can play a role in your ability to get approved for a consolidation loan and the interest rate you receive. Review your business credit report and score with MySMBScore to grasp key analytics that can help your business achieve a healthy financial position.
  3. Researching lenders: Look for lenders that specialize in business debt consolidation loans or offer them as a product. Research terms, fees, and interest rates to find the best match for your business needs.
  4. Gathering documentation: Lenders generally require documentation. Be prepared, especially when it comes to the outstanding debts you’re looking to consolidate.
  5. Applying for the debt consolidation loan: Once you’ve gathered all of your documents and materials, the magic happens! You can submit an application to the lender providing all of your information. 
  6. Accepting the loan: If approved, you can carefully review the terms of the approved loan and accept the offer. Make sure you fully understand the interest rate, repayment period, and any fees or penalties associated with the loan. Before accepting, you’ll want to know exactly what you’re agreeing to. 

Do debt consolidation loans hurt your credit?

Debt consolidation loans can have both a positive and negative effect on your personal and business credit score. The degree of impact can depend on how your manage your finances. 

When you’re applying for a debt consolidation loan, you can see a small drop in your credit score initially. This can be a result of the lender performing a hard inquiry on your credit report. The impact is only temporary. You score should recover within a few months. 

If you’re approved for the loan and use the funds to pay off your existing debts, you can see the positive impact on your credit score. From consolidating multiple debts into one loan, you’re lowering your credit utilization ratio. This refers to the amount of credit you're using compared to your credit limits. Having a lower credit utilization ratio can help improve your credit score.

Continuing to over use your credit cards or other lines of credit even after receiving your business debt consolidation loan can lead to further accumulation of debt. This pileup can potentially hurt your credit score. I can also be important to mention, if you happen to miss payments or default on your debt consolidation loan terms, you can also see the negative impact on your credit score.

No one is perfect. We all slip up from time to time. Debt consolidation loans are meant to be a useful tool to help manage your business debt. Do your best to stick to the plan and maintain a competitive financial position for your business or the one you represent. 

What are my business debt consolidation loan options?

There are different options for obtaining a business debt consolidation loan, including:

  • Traditional banks: Traditional banks may offer business debt consolidation loans, typically with lower interest rates but higher requirements for creditworthiness and collateral.
  • Online lenders: Online lenders may offer faster approval and more flexible terms, but may have higher interest rates and fees.
  • SBA loans: The Small Business Administration (SBA) offers several loan programs that can be used for debt consolidation, such as the SBA 7(a) Loan and SBA 504 Loan. These loans typically have lower interest rates and longer repayment periods but may have more strict eligibility requirements.
  • Credit unions: Credit unions may offer lower interest rates and more flexible terms than traditional banks, but may have membership requirements.
  • Alternative lenders: Alternative lenders, such as peer-to-peer lending platforms or invoice factoring companies, may offer unique loan options for business debt consolidation, but may have higher interest rates and fees.

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