Business Debt Consolidation
Welcome to Delancey Street. We are a premier, and top rated, business debt relief company. We service 49 of the 50 states, and have an excellent reputation for helping business owners escape predatory MCA’s, and other forms of toxic business debt. After being in business for many years, we’ve seen it al. Regardless of the type of debt you have, we know how to help you. Our preferred mechanism for solving business debt is through managing it, restructuring it, and settling it. Not all clients have the same type of debt, nor are any two clients in the same boat. Everyone has a unique set of circumstances, which deserves a unique approach. If you are struggling with business debt, the first thing you should do is immense research. Anyone who offers you just one solution doesn’t have your best interests in mind. They are trying to sell you something, not solve a problem for you.
For some business owners, business debt consolidation via a business debt consolidation loan is a really viable alternative. Many people think that business debt consolidation is impossible, but that’s not true. It’s possible to qualify. If you took an MCA, and are struggling to keep up; business debt consolidation can be a viable pathway out of this hole. Our goal in this article is to give you as much information as possible about how business debt consolidation works, and why it could be a viable strategy for you.
A business debt consolidation loan pays off multiple existing loans and credit cards with a single new loan. It can make sense if the new loan has better rates or terms.
If you’re looking to consolidate your existing debts, the best loans for the job are usually term loans and SBA loans. They tend to offer the most competitive rates and longest repayment terms. You apply to the lender like you would with any other business loan, and the lender will review your business revenue, credit score, and how long you’ve been in business. Once the loan is funded, you make fixed payments that cover both principal and interest. There might be a prepayment penalty, so make sure to ask if you want to pay it off early.
You’re probably wondering where to start looking for a lender in 2026. One recent ranking of lenders broke them down into a few categories. It recommended Fundera for online business loans, Lendio as a loan marketplace, Chase for a term loan, Huntington National Bank for SBA loans, Bank of America for rate discounts, Credibly for low credit score requirement, and OnDeck for short-term debt consolidation. There isn’t just one perfect answer though; it depends on your specific situation.
So how do they figure out who the best small-business lenders are? The editors dug into dozens of providers and measured them against a list of 12 criteria. Here’s the list: application process, credit score minimums, customer service reviews, eligibility requirements, extra features, fees, funding turnaround times, lender reputation, minimum and maximum loan amounts, products offered, rates and willingness to work with risky industries. They also focused on lenders willing to work with people with bad credit or relatively new businesses. Use this same list to evaluate and shop for your own lender.
When you compare loan offers, look at the APR first. You want the APR for a new loan to be lower than the APRs on the debts you’re rolling over. You’ll want to shop around for quotes from different lenders and loan types. A longer repayment term typically means the lowest monthly payment and is easier to manage on a budget. It also means you’ll pay more interest overall.
Watch out for origination fees. Some lenders tack on a fee of 0.05% to 10%, especially if your credit score isn’t perfect. That fee effectively bumps up the APR, so when you shop for a loan compare the APR, not just the interest rate. Many borrowers also complain about hidden fees, so read the fine print for prepayment penalties, late fees, or even monthly administrative fees.
Funding times differ depending on the type of lender. Generally, online and alternative lenders can move funds faster than banks and credit unions. If you need money immediately, a short-term business loan might be a good fit. And if you have a bunch of different loans with high interest rates, that can start to feel pretty overwhelming. In that case, look for a lender that has a dedicated support team to help you talk through your options.
Benefits to Consolidating
There are a couple benefits to consolidating. First, you may save on interest. Often small businesses have to take high-interest debt in their first few years, but once established you may qualify for a lower rate and pay less interest overall. Second, your new monthly payments could be lower. If you had a merchant cash advance or some other short-term loan with daily or weekly payments, a new loan could mean a lower APR and a lower monthly payment, which is the best way to preserve cash flow.
Your payments become simpler - you only have to juggle one loan and one monthly payment instead of chasing several different balances. Beyond that, you might be able to access more credit in the process: if you pay off a business credit card or line of credit, you’ll free up that credit limit for other uses. That’s especially useful for businesses that have consistent revenue and cash flow, but it also means you’re taking on more debt the business will have to pay back. Finally, consolidating your business debts may actually help your credit score by building a positive payment history, but it could cause your credit score to drop before it improves.
There are downsides, though. The origination fee may be something to consider, as well as a hefty down payment if an SBA loan is needed. And prepayment penalties can apply. So be sure the costs are worth the benefit. Plus, know that consolidation does not change your total debt, it only makes the payment easier to manage. Your balance doesn’t go away, your creditor just changes. That is the real difference from settlement. At Delancey Street, our advisors negotiate with your creditors for less than the full balance you owe.
Two more cautions. Extending the term of a loan can lower your monthly payments, but it also increases the total cost of the loan. The best consolidation loans offer lower interest rates. Almost all business loans require business owners to personally guarantee the loan, which means you are responsible for repayment if the business can’t pay. Always ensure that the business can afford the loan before putting your personal finances at risk.
Qualify for a Debt Consolidation Loan
With those risks in mind, the next question is whether you can get approved. You have to qualify for a debt consolidation loan by meeting the lender’s requirements in terms of revenue, credit score, and years in business. Requirements vary, but a common set of criteria is at least one year in business, a personal credit score of 670 or higher, and at least $50,000 in annual revenue. Just because a lender is willing to fund your debt consolidation doesn’t mean it’s a good idea.
Getting a debt consolidation loan is a lot like applying for any other type of business loan. You’ll need to fill out an application, shop around for the best lender and make sure you can afford the new monthly payment once you have your consolidation loan. Look over your debt and get the total payoff amount for each debt. The sum of all your debts is the amount you will need to borrow. Then, figure out how much you’ll pay with the new loan. If it’s more than what you’d pay each lender individually, it may not be worth it. Check both your business and personal credit, too. What lenders you can work with, and what APRs you’ll qualify for, depends on your credit scores. But even if you have bad credit, you may still be eligible for a debt consolidation loan. Check banks and larger online lenders first. Make sure that the lender permits debt consolidation. Some will not let you use their loan funds to pay other debts.
The standard paperwork you’ll likely need includes bank statements, tax returns, financial statements, and other documents. You may also have to sign a personal guarantee. Complete the full application and upload (or link) all the necessary documents or your financial accounts. Double-check the application for mistakes before you submit. Accurate info can help speed up the process. Once you’re approved, make sure to go through your loan documents and double-check that your loan actually makes financial sense. It should lower either the total cost or the monthly payments. Make sure there aren’t any hidden fees or prepayment penalties.
Traditional banks, credit unions, and online lenders all offer loans for debt consolidation. Although banks and credit unions typically offer the best rates, particularly if you’re an existing customer, online lending platforms like Lendio, Lendzi and Biz2Credit work with many lenders and could help you score a good deal. Prequalification is when you fill out a series of questions about yourself and your business to see if you’re eligible before actually applying for a loan. After you’ve filtered through your options based on the offers from your prequalification, you can then formally apply to a lender of your choice.
If you were denied, you should go back and review everything you included in your application. Verify that your revenue, time in business, debt amounts and credit score were all correct. Even minor errors can impact a lender’s decision. If your application seems accurate, reach out to the lender and ask for feedback on why you were denied. Before submitting another application, make sure to fix that weakness - whether it’s paying down debt, boosting revenue, adding a co-signer, or waiting longer for your business to gain more history.
Not the Only Option
A business loan is not the only option when it comes to consolidating high-interest business debt. There are lenders who will let you use a personal loan for your business expenses. Personal loans don’t depend on your business revenue or time in business, so they may be the best bet for newer businesses that don’t qualify for a business loan. If you own your home and have at least 20% equity, a home equity loan or a HELOC might be a cheaper way to borrow money than a business loan or credit card. However, if you aren’t able to make payments, you could lose your house. A rollover for business startups (ROBS) will let you use the funds in your retirement account to fund your business without taking any penalties. In order to qualify, your business must be a C corporation. It’s also best to have at least $50,000 in your account. Be careful, though: you could be on the hook for heavy penalties if you don’t do it correctly, so it may be better to hire a pro if you want to go that route.
You can consolidate debt with a business loan if your lender permits debt refinancing as an approved use of funds. Many term loans and SBA loans can be used to pay off existing business debt. However, the exact eligibility requirements and refinancing rules can vary by lender and loan type. If you qualify for a lower interest rate or longer term with a debt consolidation loan, you may be able to reduce your overall cost or improve your cash flow. If the new loan’s APR is higher or extends your repayment period considerably, consolidating could raise your total expense. Always review the terms carefully before proceeding. If you do consolidate, plan the repayment from day one. Starting with a clear picture of your total monthly payment and incorporating it into your budget is the first step. You may speed up repayment by using consolidation to get a lower interest rate, trimming unnecessary spending, increasing your revenue or making extra principal payments when you have the cash flow.
So, how do you find the best business debt consolidation company? There’s no one-size-fits-all top lender for everyone. Your ideal loan depends on things like your credit, how long you’ve been in business and whether you’re looking to cut interest rates or just make payments simpler. Well-established companies with great credit might get the lowest rates from banks or SBA lenders. Newer companies or those with lower credit may need to look at online or alternative lenders.
If the numbers on a new loan don’t work for your business, it may be worth talking to someone before you sign anything. We’re not lenders - we are a business debt settlement company. At Delancey Street we negotiate with merchant cash advance providers, lenders and other business creditors to get you relief from debt, for less than the full amount you owe. If it makes more sense for your business to pursue a consolidation loan, we will tell you this upfront on the first call. That initial consultation is free and private.
