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Personal Loans -Debt Consolidation for Business Debt

Access to credit for small businesses is essential for quicker progress and faster growth, but at the same time, if uncontrolled can be a thorny issue for any entrepreneur, especially if they have to grapple with more than one. This is where business debt consolidation loans come in handy, and this article will provide you with a complete resource for understanding how this type of credit works and how you can qualify for one.


But before you go through the rest of the page, here are just the top lenders offering this loan type:

  • Best Rate
  • Min. Credit Score
  • Minimum Time in Business
Funding Circle
  • 12.18%
  • 660
  • 2 years
Credibility Capital
  • 19.99%
  • 650
  • 2 years
OnDeck Capital
  • 35.1%
  • 600
  • 2 years
  • Best Rate
  • Min. Credit Score
  • Minimum Time in Business
Shield Funding
  • 12%
  • 530
  • 3 months
  • 11%
  • 600
  • 1 year
  • 7.99%
  • 660
  • 1 year
  • APR range
  • Fees
  • Terms
  • Amounth
  • Unemployment protection
Bank 1
  • 6.95%–35.89%
  • Up to 5% transfer fee
  • 3–5 years
  • $1,000–$40,000
  • No
Bank 2
  • 6.95%–35.89%
  • Up to 5% transfer fee
  • 3–5 years
  • $1,000–$40,000
  • No
Bank 3
  • 6.95%–35.89%
  • Up to 5% transfer fee
  • 3–5 years
  • $1,000–$40,000
  • No

Table of Contents

How Debt Consolidation Loans for Business Debt Work?

Businesses, in all shapes and forms, will, at one point, need credit to either pursue growth or get over a financial hump. And entrepreneurs will typically take whatever is available in order to get their business going — even if that means obtaining multiple debts.  But while taking on a lot of credit may seem like a terrific solution in the short term, it can be a headache over time.


A debt consolidation loan is one way to help entrepreneurs manage their finances. Essentially, the way it works is a lower-interest loan is obtained and it’s used to pay off all existing loans, cash advances, and whatnot. 

Hot Tip:

Using this option would mean getting a lower cost overall for all your debt, and multiple payments are streamlined into one.

Requirements to Qualify

Most online lenders would need you to fill out an application form over the internet where they’d require some information about you and your business to initiate the application process.


You would need to provide your details as the primary owner of the business, which includes your contact information and address. And typically, you need supporting documents to go along with your application. One example is proof of identity, and lenders can accept your Social Security Number or a copy of your passport, driver’s license, or tax ID for this. 


Then, the details about your business that you need to provide include the revenue, location, activity, list of owners, etc. Often, the most crucial is what your company earns, so lenders need to verify this through tax returns or bank statements.

Does a Business Consolidation Loan Make Sense for Me?

Consolidating debt is not for everybody. Even if you think that it’s what your business needs to survive, you could end up in far worse shape if you’re not careful. Below are just three instances when business debt consolidation loans are applicable:


If your business is profitable

First and foremost, a debt consolidation loan only makes sense if your business makes money. This is because lenders tend to view an application based solely on your business’s performance, especially if it’s a debt consolidation loan where access to liquid capital to meet financial obligations is of most importance. 


If you can only get better rates

Whether it’d be for personal or business, the whole point of consolidating debt is to secure much lower rates to reduce the overall cost of your credit. And even if you can get a lower monthly payment, you have to understand that the direct consequence of this is a longer repayment term. You wouldn’t necessarily feel the pain early on, but as time goes by, the effects of a higher interest rate become more palpable.


If you don’t plan on acquiring any more debt

Finally, the last consideration is if borrowing money for your business ends after debt consolidation. Treat the loan to combine all your debt as a last resort so that you don’t get sucked in a never-ending debt cycle. Therefore, unless you’ve fully paid the debt consolidation loan, you must consider another way to get funds without using credit if ever the need arises.

Hot Tip:

Unless you're taking out an asset-based loan, you must ensure that your business earns verifiable profits.

Pros and Cons

Aside from knowing the best cases where consolidating your company’s debt is most applicable, it also helps if you know what its advantages and disadvantages are to decide whether you should even seek it or not. 


Here a summary of this loan type’s pros and cons:

Pros Cons
Improves cash flow A loan with better terms would mean that extra funds previously allocated for debt repayment would get freed up, allowing you to have a higher cash flow. Having more cash each month opens other opportunities for your business to pursue.
Longer debt repayment schedule As touched on earlier, the tradeoff of consolidating debt is that you prolong your repayment schedule. This means that your business stays in debt for a much longer period, and depending on the borrowed sum, but this can be years.
Helps you focus on what matters in your business Having a boatload of liabilities often leads you to scrape together for monthly debt payments, detracting you from the activities that truly matter in running your business. With just one bill to think about after consolidating loans, you can go back to focusing on tasks that directly impact the success of your business.
It can't fix a bad business model Even if a debt consolidation loan can get you out of a deep financial hole that you dug yourself in, it still can't solve an underlying problem about your business -- its viability. A lousy business remains just that, a lousy business and will continue to pile up debt until a fundamental flaw is fixed.
Enables you to concentrate on growth instead of surviving Loans and liabilities with high rates consume you, and it makes all your profits aimed at only covering repayments. This hampers your creativity and entrepreneurial passion. A single monthly loan payment in your calendar would allow you to divert your focus on pursuing growth instead of just surviving.

How to Manage Your Debt Consolidation

Below are just some tips for managing your debt consolidation loan:


  • Review loan terms do this immediately after: The first thing you should do after you consolidate your debt is to review every bit of detail about your new financial obligation. The obvious ones are the due date, rates, and the exact amount you need to pay. But apart from that, you should know the late payment fees and their corresponding grace periods as well as fees for paying off the entire amount ahead of time.


  • Pay everything: Debt consolidation loans can be your last chance at accessing credit since it’s usually a measure to tame a debt problem that has gotten out of hand. If you still end up opting for a debt settlement after this, it may be hard for you to obtain credit again for years.


  • Set up automatic payments: One way to ensure payment on time each month is to set up automatic payments. In doing so, you don’t risk any late payment fees.


  • Reconsider the rest of your expenses: Once you’ve merged all your business debt into one loan, the thing you could do to prevent yourself from falling for the same trap is to take a better account of your expenses. You must either do a better job at budgeting or consider tightening your belt.


Alternatives to Debt Consolidation for Business Debt 

When things don’t work out according to plan, and you’re unable to obtain a debt consolidation loan to manage your debt, know that you have other alternatives.


Increase your credit line or restructure your debt

Let your creditors in on your situation and request if you could extend your credit line. After all, if you were a good-paying borrower before, it would also be in your lender’s best interest to adjust and accommodate your request so they could maintain you as their client. The last thing lenders want is for creditworthy borrowers to be beyond their reach.


Reduce your costs

Are there any non essential expenses that your business incurs? If so, you might want to think about cutting them off so you could allocate some of your company’s income to loan repayment. In this way, you don’t need to apply for a new loan.



Filing for bankruptcy is your worst-case scenario option. If you feel like maintaining the business is too physically, emotionally, and mentally taxing, and any additional debt will only exacerbate your circumstances, then involving federal courts is perhaps the only way to get out of your debt predicament. But like debt settlements, filing for bankruptcy will negatively impact your eligibility to borrow in the future.

Personal loan guaranteed approval

Of course, there are also personal loans with guaranteed approval, and borrowers who seek this kind of credit would typically face no hassle in their application. Lenders of this loan type will allow you to borrow money regardless of your credit history or score and without collateral.


This is also called payday loans, fast cash, deferred deposits, low credit loans, or cash advances, and the standard range of the amount you can borrow is $350 to $1,500.

You can benefit from guaranteed personal loans if you happen to run short on a few cash and need to pay for something urgent.

Online Loans without Credit Score

When it comes to online personal loans without a specific credit score, the best option is with One Main Financial. This Indiana-based financial services company can allow you to borrow up to $20,000 with an APR range of 18% to 35.99%.


One Main Financial is great for those with bad credit scores but needs cash fast. This company does not factor in excellent credit scores in approving loan applications and can even accept those with lower-than-average credit. What matters to this lender is your ability to pay back the loan, and it should be apparent just from your application.


The drawback, of course, is this lender’s high rates. It has one of the highest rates among other online lenders, and it also charges an origination fee. But this can be ameliorated by adding a cosigner to your application or opting for its secured loan instead.

Frequently Asked Questions (FAQ)

Yes, much like personal loans for debt consolidation, specific credit products are catered explicitly to combining a business’s existing liabilities.

It’s always ideal to pay your debt in full as this maintains your quick access to credit, especially when you need it for emergency purposes.

If you want your debt to be at a level where it is manageable for your firm, then you should maintain a debt-to-income ratio of at least 36% and, ideally, even lower. With this ratio, it is much easier for you to attract exceptional terms and rates if ever you need access to credit.

Yes, some lenders offer loans even to lenders with a credit score of less than 600.

Yes, there are specific lenders that provide business loans, even for businesses that are not more than a year old.

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