Business Finance

How To Consolidate Your Business Debt

Is your business suffering from cash flow problems?  According to the Federal Reserve’s 2016 Small Business Credit Survey, 61% of employer small businesses faced financial challenges last year, and 25% had trouble paying their debt. If you are in this position, business debt consolidation can help you get the situation under control. Debt consolidation is a popular way to get a handle on your debt and start bringing it down and debt consolidation loans are the most popular vehicle for consolidating your debt. But how do you do it? Here’s what you need to know.

How business debt consolidation works

Business debt consolidation works by combining a business’s current outstanding loans and lines of credit into one new loan. When the new loan is approved, all of the old loans are paid off, and you only have to make one monthly payment. It is similar to simply refinancing a loan, except instead of refinancing one debt, you refinance multiple debts into one.


  • Pay less:
    A lower interest rate can result in lower monthly payments and more of your payments going toward the principal.
  • Increase convenience:
    You’ll only have one loan to manage from one lender instead of several from different lenders.
  • Lower your payment significantly:
    There is an option of extending the term of your loan to lower payments. Although this may cost more in the long run, it can help you get payments to an amount you can afford.
  • Minimize credit damage:
    You may be able to minimize damage to your credit, which would be caused by missing payments to several lenders.


  • Pay more in the long run:
    Extending the term of your loan is also a drawback because you will pay more for your loan in total.
  • Misleading lenders:
    Loan companies can be tricky about their offerings, so be sure to read the terms and conditions carefully to ensure they are offering a better deal.
  • May tempt you to borrow more:
    You may see credit become available from your prior lenders, which can be tempting to use but will worsen your debt problem.

How to consolidate business debt

In many cases, business debt consolidation can be beneficial to help a business get control over its debt situation. The key is finding a loan company you can trust. Many will advertise they can lower your monthly payments but it’s important to look at the whole picture, including fees and how much you will pay over the duration of the loan.

Extending the length of your loan is the easiest way for lenders to lower your monthly payment amount because it doesn’t cost them anything, but it costs you more over time. So look for a lender that can offer the best monthly payment while also offering a low-interest rate, minimal fees and a loan length that doesn’t increase your overall cost. Then, check whether the monthly payment will be lower than the total you currently pay to your various lenders.

In the case that you can’t lower your payment enough without extending your loan length, but also can’t afford your current payments, extending the loan length may be the best option. Even though you are paying more in the long run, the immediate benefit of not defaulting on your existing loans may be worth it.

Where can you find trusted lenders that offer business debt consolidation? We have reviewed and compared several companies and here are our top picks to get you started on your search.

Recommended business debt consolidation companies

SmartBiz is a lending company that focuses on helping small businesses get the funding they need at reasonable prices. It offers debt consolidation loans that can be used to refinance debts including but not limited to business credit cards, high-interest business loans, merchant cash advances, daily or weekly payment loans and short-term business loans. It’s easy to find out if you qualify; head over to the website and you can get pre-qualified without any effect on your credit.

Funding Circle is a leading loan marketplace, focused on small businesses, that connects borrowers with investors to fund loans. It has processed more than $3 billion worth of business loans in the Netherlands, Germany, the U.S. and the U.K. The founders are small-business owners themselves and their goal with Funding Circle is to revolutionize the outdated banking system and secure better deals for everyone. You can also easily apply online with this lender to find out if you qualify.

LendingClub is the largest loan marketplace in the world, offering loans for personal and business purposes. It has funded more than $9 billion in loans and offers very competitive rates and terms. Debt consolidation is one of the loan products available through this marketplace, which can also be applied for online in a matter of minutes.

Find the right lender for you

To find the best deal for your business’s debt consolidation, shop around and get offers from a few lenders. Don’t forget to look at the whole picture including monthly payment, interest rate, fees and loan length. Then, you can make an educated decision on which will be the most beneficial.

Ready to get started? Head over to our business loan review page, where you’ll find a list of lenders for businesses along with product reviews and real user ratings.