Whether we like it or not, debt is the driving force behind most businesses.

These loans are often a blessing and a necessity, but they can also become a source of financial hardship. There are times when revenue falls short and a business can’t muster money to service debt.

But putting a halt to these payments is not an option.

Other times, a business may be doing just fine but the high interest rates on outstanding debt are burdensome.

This is where a business debt consolidation loan can save you a lot of money—and a lot of headaches.

What is a business debt consolidation loan?

Business debt consolidation loans are a financial product that combines numerous debts into a single loan. They typically entail a change to any or all of the following parts of the existing loans:

  • Monthly payment: The monthly payment amount will likely be lower than the previous combined payments.
  • Loan balance: The total amount will reflect the combined debts and any fees related to the consolidation process.
  • Interest rate: Typically, the new interest rate will be lower than the average interest rate of the individual loans.
  • Term length: Repayment periods are often extended to reduce monthly payments. Alternatively, some borrowers will consolidate loans into a shorter term, enabling them to pay off the debt faster, even if that means higher monthly payments.
  • Type of interest: In some instances, the kind of interest rate (fixed or variable) may be altered.
  • Collateral requirements: A small business debt consolidation loan may require collateral, depending on the borrower’s creditworthiness.
  • Fees and penalties: Consolidation loans often include associated costs, and some lenders may charge you for early repayment.

When should you consider a small business debt consolidation loan?

There are a couple of scenarios in which a debt consolidation loan can come in especially handy.

To improve cash flow: Debt consolidation is often used to help lower monthly payments and improve cash flow.

For example, a dry year may reduce a farmer’s seasonal income. Debt consolidation could help lower the farmer's monthly expenses by reducing their debt burden, allowing them to financially survive the season.

To reduce high interest rates: If you’re servicing numerous high-interest loans, consolidation may allow you to combine the debts into a single loan with a lower rate.

Even if you can manage the existing debt, this can still be a financially prudent move.

Imagine you have the following two loans:

  • Loan A: $25,000 outstanding balance incurring 10% interest with $1,000 monthly payments.
  • Loan B: $15,000 outstanding balance incurring 12% interest with $700 monthly payments.

Your current monthly payments are $1,700. You decide to consolidate the balances into a single loan for $40,000 at a 9% interest rate. The new loan has a repayment period of three years and payments of roughly $1,270, saving you $430 per month.

To simplify debt management: Some people pursue consolidation to streamline cash flow. It’s easier to manage a single monthly payment than three, four, or more.

To enhance your credit score: Your credit score may be harmed if you can’t make consistent and timely payments on your debt. Consolidation can improve scores by providing a lower monthly debt burden.

But remember that, initially, it can adversely affect your score.

How to consolidate business debt

  1. Reconcile your debts: First, take stock of your debts. Make a comprehensive list of your outstanding balances, their interest rates, and loan terms.
  2. Be sure that you’ve recorded every debt for an accurate financial snapshot.
  3. Determine your financial health: Assess your present financial status. You want to account for your cash flow, projected revenue, and credit score.
  4. Research consolidation options: It’s important to compare the various interest rates and loan terms available. There isn’t a “best” business debt consolidation loan. There’s just the best one for you.
  5. Apply for a business debt consolidation loan: Once you’ve selected the best lender, apply. You’ll likely need to provide personal information, financial statements, and other business records.
  6. Utilize the new loan: Assuming you obtain approval, use the funds from the new loan to pay off the existing debts.
  7. Manage: Now that you have a single loan, it’s imperative that you manage it diligently.
  8. Militantly pay at least the minimum amount each month, using reminders if helpful. And absolutely avoid accumulating any new debt.

Business debt consolidation loan benefits


  • Lower interest rate: A business debt consolidation loan will often have a lower interest rate than the average on the existing loans.
  • Improved cash flow: Extending the term length of your debt can lower your monthly payments, lessening the debt burden on your business’s cash flow.
  • Better credit score: Paying off numerous loans can often positively impact your credit score. Of course, this assumes you make timely payments on the new loan.
  • Simpler monthly payments: Reducing numerous monthly payments into a single amount helps simplify debt management. Easier debt management means you’ll have a lower chance of missing payments.


  • Criteria for qualification: Consolidating debt may require you to meet strict requirements.
  • Collateral risk: If you require a secured consolidation loan, your business assets may be at risk if a default occurs.
  • Credit score impact: While debt consolidation can help your creditworthiness, it requires a hard credit score inquiry. Initially, this inquiry can temporarily harm your score.

The best debt business loans for debt consolidation

Business loans for debt consolidation are plentiful. To help you save time, here are three of the best offerings accounting for lender reputation, customer reviews, loan details, terms, application process, and unique features

American Express Business Blueprint

American Express Business Blueprint offers customers lines of credit ranging from $2,000 to $50,000 with six, 12, and 18 months repayment terms.

Although the fees are higher than some competitors, you gain access to a reputable platform with a straightforward funding process, no early payment penalties, and a mobile app that provides insights into your business’s cash flow.

  • Loan amounts: $2,000 to $50,000
  • Fees: 3%-27%, charged monthly
  • Loan Terms: 6, 12, and 18 months
  • Minimum credit score: 660
  • Estimated APR: 6.98% to 19.97%


If you’re looking for rapid approval, consider Fundbox. This AI-powered platform delivers a fast application, decision-making, and equally important, funding process.

Small business owners needing to backfill a cash flow disruption can obtain credit in as little as one day.

  • Loan amounts: $1,000 to $150,000
  • Fees: $99 per month
  • Loan Terms: 12 or 24 weeks
  • Minimum credit score: 600
  • Estimated APR: 10.10%-78.80%

Credibility Capital

Credibility Capital is an excellent option if you’ve been operating your business for at least two years and are profitable.

This lender doesn’t charge prepayment or application fees and offers loans as high as half a million dollars.

  • Loan amounts: $50,000 to $500,000
  • Fees: One-time closing fees ranging from 2.99% to 4.99%
  • Loan Terms: 12 to 60 months
  • Minimum credit score: 650
  • Estimated APR: Starting at 9.49%

Overwhelming debt payments can feel crushing, but they don’t have to spell the end of your entrepreneurial ambitions.

Restructuring, managing, and ultimately alleviating your burden is possible through a business debt consolidation loan. Even if you’re only experiencing a temporary cash flow challenge, consolidating business debt can help you bridge choppy financial waters.

In fact, even if you aren’t experiencing any debt challenges, consolidation can still be a financially wise choice.