Taking existing business debts and then taking them into a new loan will help you with debt consolidation loans. Many types of business loans can be used to pay back business debts, including SBA loans, which are supported by the US government and provide competitive terms.
However, you will want to compare different lenders to find the best possible loan offers. Ideally, a new loan will offer lower interest rates or longer repayment terms.
Look at the types of loans and top lenders offering low interest rates, high loan amounts, or long repayment terms.
Compare the best business debt consolidation loans
| Lender | Loan type | Loan amount | Bankrate score |
|---|---|---|---|
| SBA | SBA | Up to $5.5 million | 4.8 |
| Ibusiness Funding (formerly fundraising circle) | Long-term loan | $25,000-500,000 | 4.5 |
| Funding | Credit business line | $1,000-500,000 | 4.7 |
| Accion Opportunity Fund | Term Loan | $5,000-250,000 | 4.1 |
| Outside | Short term loan | $50-1.5 million | 4.4 |
| back | Working capital loans | $10,000-2 million | 4.5 |
What is a business debt settlement loan?
A business debt consolidation loan is a business loan used to repay other business loans and obligations, allowing you to make a monthly payment. If your new loan offers longer repayment periods or lower interest rates than your current loan, you may consider getting a debt consolidation loan for your business.
You may also need a consolidated loan to help track and repay your business’s debts using a single payment. However, it should be noted that new business loans may cost more than your current loans if the new interest rate is higher than what you currently have, or if the new loan comes with additional charges such as a draw or origination fee.
You will pay interest for a longer period, so if you choose a longer period of repayment, you can also pay more. We recommend choosing this strategy only if you need to pay lower. Before consolidating your business obligations, make sure you do not charge a payment penalty for any of your current loans if you paid before the payment schedule ends. Use a business loan calculator to estimate the loan cost and determine whether a new loan will offer the real benefits of long payments you need.
What is the difference between consolidating business obligations and refinancing?
Debt consolidation business loans are similar to refinance in that you take a new loan to pay off your first business loan. The main difference is that refinance involves taking out a new loan to pay off only one loan, while business debt settlement involves taking out a single loan to pay off multiple business loans.
How to consolidate business obligations
To begin consolidating your business obligations, follow these steps:
- Apply or prequalify for business loans from multiple lenders.
- Compare loan offers, look at interest rates, compare total interest charged and repayment terms offered.
- Choose your business loan with the best offers from your preferred lender.
- Complete your new business loan by filling out the application, being approved and making payments.
- Depending on the lender, wait for you to receive the loan fund, which could take 24 hours to several weeks.
- Use loan funds to repay other business loans.
- Continue paying for the integrated business loan until the loan is repaid.
Conclusion
Many types of business loans can be used to pay off your current business loans and consolidate your debts. When applying for a loan, simply state that the purpose of financing is to repay business obligations.
However, the best business debt consolidation loans offer lower interest rates or longer repayment terms than current loans. These favorable terms can help you reduce your monthly payments or save interest money. To make sure you’re getting the best offers, you can get prequalified with some business lenders and see what loan features they offer you.
