Business Debt Consolidation Loan

A loan used by companies that have multiple different loans and other debts and want to combine them into a single loan.



A business debt consolidation loan combines multiple existing credit lines and loans into a single loan with the lowest possible rate. A business debt consolidation loan can help reduce interest rates, lower monthly amortization, and allow you to borrow additional funds. Small businesses that want to consolidate their debts can use an SBA 7(a) loan.

SmartBiz offers loans up to $350,000. Their comprehensive online application can get you prequalified in minutes. They work well with businesses that are in operation for more than 2 years, with a credit score of 680 or higher.

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How Business Debt Consolidation Loans Work

If you’re overwhelmed and tired of keeping tracks of different debts and coordinating with several creditors, consolidation may be just the right option for you.

Debt consolidation is necessary if you find the original loan terms are no longer convenient, want a low-interest option, or want to extend your payments for your current short-term debts. If maintaining multiple outstanding short-term loans has taken its toll on you, debt consolidation will make you manage just a single loan.

The best time to consolidate business debts is when you’re a better applicant for a loan than you were in the past. For instance, your personal credit score has significantly improved since the last time you applied for a loan. A credit score of 680+ will qualify you for 10-year SBA loan (check your credit score here).

When your business credit profile has improved, don’t have more debts than you can handle, and do not use up your credit lines is a good time to start consolidating debts. Improvement on your personal finances (i.e when your income has increased and expenses reduced) is a sign that you are ready for debt consolidation.

Additionally, if you have an improved business profitability with a consistent upward trend for the past 3 months or more and has been operating for a longer time, you can easily get qualified for debt consolidation. Ideally, business annual revenue must be $120,000 or higher, and at least 2 years operational.

Steps to Consolidate Business Debt

  1. Identify all your outstanding debts. Determine how much you owe on each loan if you were to pay off in a lump sum today, and add all your payables to get your total outstanding debt.
  2. Check if there are prepayment penalties. Some lenders impose penalties for early payments, which can be more costly than just maintaining the loans.
  3. Determine that loan size that you need. Add the penalties (if any) to the total amount that you owe from step 1 to find out the loan size that you need to consolidate.
  4. Calculate the effective APR of each existing loan product. This is to help you identify whether taking a debt consolidation loan will provide long-term benefits to your finances or not.
  5. Look for new funding options. You can select from a number of debt consolidation companies to broker your loan. They will help you negotiate for the new loan on your behalf, and assist you with all other necessary processes.
  6. Compare the APR and terms of the new loan with the old. This is to ensure that you are making the right decision in consolidating your debts and that you are truly saving on interest and fees, and all on better terms.
  7. Decide and apply. As soon as you find out that taking a debt consolidation loan is the right choice for your business, it is time to proceed with the application.
  8. Pay debts and follow through with your new payment schedule. Once you get approved and funded, pay off all existing debts and manage your single loan more efficiently.

Loans That Qualify for Debt Consolidation with the SBA

It is possible to consolidate business debts through SBA 7(a) refinancing program. SBA loan is a good option for debt consolidation because it is government-backed, offers higher loan amounts with longer repayment terms, and their interest rates are reasonable.

Debts may only be eligible for consolidation and refinancing with SBA 7(a) if the lender can document that:

  • The original debts were incurred for an eligible purpose
  • The debts are currently on unreasonable terms
  • The proceeds will not be used to pay off a creditor in a position to sustain loss
  • The debt consolidation loan will provide a substantial benefit to the small business
  • The loan is current and updated

To consolidate debts from credit cards, SBA requires a certification from the borrower stating that the credit card has only been used for business purposes. Copies of receipts may be required if the credit card is under the personal account of the borrower.

Qualifications for Business Debt Consolidation Using SBA 7(a) Loan

Credit Score680 or more
Business Revenue$120,000 annual and on upward trend for the last 3 months
Time in BusinessAt least 2 years or more
CollateralMay be required by lenders, they may place a blanket lien on business assets
PurposeThe purpose of the original loan would have been SBA eligible

Business Debt Consolidation SBA 7(a) Loan Costs and Terms

Loan Terms10 years
Payment frequencymonthly
Loan amountBetween $30,000 to $350,000
Approval Turnaround TimeTypically in 1 week
Funding Turnaround TimeTypically 45 to 60 days
APRBetween 6% to 9.5%
Other Fees4% origination fee + guarantee fee of 3% to 3.5% on loans above $150,000

Bottom Line

It is important to research well before you commit to any debt consolidation option. Calculating the costs keenly is essential to know if consolidating your debts will do more good to your finances than harm. Be meticulous with every detail -- especially when it comes to penalties, rates, fees, and terms -- as this will greatly impact your overall business financial health.

Need a financing option to consolidate your debts? If your business is open for at least 2 years, and you have a credit score of 680 or higher, you may qualify with SmartBiz. They offer loans up to $350,000. Their online application is easy and can be completed in a few minutes.

Visit SmartBiz

The Details:

Maximum Investment Amount

Typical Term
10 years

Typical Interest Rates
6% - 9.5%

45 - 60 days

Down Payment?


Personal Guarantee?

Have a question?

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small business loansPossible reduction of interest rate.

small business loans

Longer and better repayment terms.

small business loans

Lower monthly amortizations and more predictable payments.

small business loansAdditional loan amount may be allowed.

small business loansBetter cash flow management because you only need to manage one account and due date.


May take time and effort to apply for another loan.

It’s a temporary solution to a problem, which is the debt itself.

Extended payment may also be a disadvantage for some businesses because it will take longer to pay-off the loan.

How to Apply

Answer Simple Questions


Browse Your Loan Options

Get Funded in Record Time



Additional Resources

SBA Loan Rates: Current Interest Rates & How They Work

SBA Loan Calculator

How Can a Startup Get An SBA Loan?

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