Best Fast-Approval Business Debt Consolidation Loans

Consolidating your small business loans can help keep your bills manageable. If you have several business loans, this lets you combine them all into one convenient monthly payment. It may also lower your rate and bring savings, though that’s not guaranteed. Especially if you have expensive debt, like credit cards, a line of credit or merchant cash advances.

Think consolidating is right for your business? Weighing whether this makes sense for you requires research. This article will explain how consolidation works, how it differs from refinancing, the pros and cons, where to borrow and the steps in the process.

How it works is not so different from consolidating any other kind of debt. You are swapping multiple debts for a single loan.

Decide which debts you want to include.

Apply for a consolidation loan; once approved, use the money to pay off the old loans.

Then moving forward, all you have to do is repay your new loan, under the terms set by the lender. Be sure to stick to the new payments.

It also helps to know your numbers ahead of time. Shop around and see what lenders are offering. Check your credit scores, because that influences which loans you can get. Know what you’re getting into. And note that consolidating is different than refinancing.

A lot of people use these terms interchangeably. They aren’t the same. Consolidating alone may not reduce your debts’ cost.

Refinancing is similar to consolidating in some ways. But there are a couple of big differences.

Consolidation requires two or more debts. You can refinance with one.

The goal of refinancing is often to reduce the rate you pay on a debt, which then can reduce the payments and debt costs.

Consolidation, by contrast, is mainly about rolling several payments into one so repaying is easier. Lower payments or interest rates may or may not come along as a bonus.

Just because you can consolidate doesn’t mean you should. Before moving forward with consolidation, make sure it’s the right thing to do right now. Beefing up your credit score, income and business stats helps, a lot, but it won’t be magic if things are bad. Still, managing these areas can lead to a lower rate or longer loan term.

Building up your personal credit can get you a better shot at consolidation loans with attractive rates and loan terms.

Improve your business credit ratings.

Boost your income.

Boost your annual revenue and cut expenses.

Advantages of Consolidating Business Loans

If you can’t decide whether to consolidate your business debts, list the advantages against the downsides. That should make it clearer which choice is the right one now.

Start with the advantages of consolidating business loans:

Sometimes, but not always, a consolidation loan means paying less interest. That can happen if the new loan has a lower APR than the debts you’re consolidating. Loans with higher rates charge more in interest. Not only will you be shelling out more cash; the longer you carry the debt, the more you’ll pay in interest fees.

Keeping up with multiple loan payments can be stressful. It can be even tougher if the payments are coming due at different times of the month. Staying on top of multiple loans and their payments, along with rates and due dates, takes time. Consolidating cuts those responsibilities down to one. Being able to manage just one loan gives you more time to devote to growing and expanding your business.

You don’t need good credit to run a business, but it can have a big impact. You may have to negotiate harder with lenders or end up paying more to use their money. It’s the same for suppliers and vendors. Making on-time loan payments is one of the best things to do for your credit ratings. If you tend to miss payments when juggling different bills at once, consolidating can be useful. You’ll have fewer debts to manage, so that one monthly payment will be easier to remember and to get done on time.

However, there are a few reasons why consolidating may not be the right option for you.

This strategy doesn’t automatically lead to lower rates or payments. Keep in mind, the lender makes the final decision on your rates. You might not get the rate you hoped for. Your rate can be influenced by your credit score, how much you borrow, your business debts, loan type, and the lender. And remember, if your finances are not so strong, consolidating could mean a higher rate.

Check the new loan’s APR, fees and term before you sign for it. Drawing the repayment out over more years can ease up each month’s payments, but keep in mind that it also means staying in debt for longer. But over time, a longer period may mean paying more interest overall.

Yes, consolidating can potentially lower your monthly debt bills. But if your business has bigger cash flow problems, that won’t go away by consolidating. It might buy you some breathing room while you’re sorting that out, but it’s not the fix you need. If your monthly costs are climbing while your revenues are flat or even falling, consolidating debt could have you borrowing money again, but worse off than when you started.

Loans for Consolidating Business Debt

There are many places to apply for loans for consolidating business debt. Below are just a few lenders you might explore. Be sure to compare a range of lenders before picking one.

The best source for small business loans is often the place you already do your business banking. Traditional banks and credit unions often offer competitive rates. Banks and credit unions may offer business consolidation loans with repayment terms as long as 10 years. If you’re a loyal customer, that can give you an edge on rates and fees.

But it can be tough to qualify for them. Banks generally want several years in business, solid revenue and top-notch credit scores. So they’re not great for startups or young businesses.

The Small Business Administration has several different loan programs. Look into the SBA 7(a) for help with debt consolidation. You can borrow up to $5 million with the 7(a) loan program.

SBA loans tend to offer competitive rates, like banks. They too favor established businesses with strong revenue and credit, but some programs may work for younger businesses or imperfect credit.

Online lenders are another place to compare your options. They may have offers that compete well with traditional lenders. A term loan is probably the most common option. Terms tend to be up to five years, though that varies by lender.

Consolidate Your Business Debts

Ready to consolidate your business debts? These steps will take you from choosing which loans to consolidate to managing your new loan.

Be clear about why you’re considering consolidating your debts. If you want lower payments to improve your cash flow, then consolidating to a lower-interest loan could work. Or perhaps you want to cut the number of monthly bills to keep track of. Consider that as well as cost in picking the loan to use.

Look at your loans, credit cards, lines of credit and merchant advances. Record your business’s debt and payment totals for each one. That includes the total balances you owe, the APRs, your monthly payments and the terms for each debt.

Your goal can also affect your decisions on rates, terms and how much to borrow. If it helps, rank your loans by APR. Target the ones with the most expensive APRs. If your main goal is to lower your debt payments, you might pick the loans you can get paid off the fastest. These will likely be the ones with the highest monthly payments. It’s fine to consolidate every loan you have. But if you have a certain debt you can’t consolidate, or a super-low-interest loan you want to keep, you can leave those out.

Once you know what loans to pay off, look closer at the terms and conditions for them. Some loans may charge early repayment penalties, also called prepayment penalties. Calculate how much it would cost to pay off each loan early. That way, you can budget for any early payoff fees.

If you have solid revenue and credit, you might start by comparing banks and credit unions. If you want an easy process and fast funding, an online lender may suit you. Some online lenders can get you funded in a few business days. Rates and term loan amounts may look the same on paper, but the time to get the money in hand varies between lenders.

Compare your loan offers carefully. Calculate and compare how your existing debts’ APRs compare with the consolidation loan’s APR. Be sure to compare terms, not just rates. Then use a loan calculator to see the long-term costs compared to the previous debts.

Lenders like to see a clean and consistent financial story. Have your docs in order before applying. Lenders may ask for two years of personal and business tax returns, bank statements, credit reports and financial statements, along with a business plan. Having all your financial statements and business documents in order can help speed up the approval process.

Gather together any documents you’ll need and fill out the loan application. Once you’ve assembled the application, double-check that all the sections and required documents are included. Then submit it and patiently wait to learn what the lender decides. Once approved, the lender will ask you for bank account details. They can then send your loan money to you.

Once you’ve got your money, use it to pay off the debts you decided to consolidate. Make sure to pay in full, which may mean requesting an exact pay-off amount. The payoff amounts may be higher than what it says on your last statement. Confirm with each lender that the balance is paid off. Also check your credit reports to make sure everything is closed. It can take about a month for it to be updated on your report.