Business August 14, 2018 Last updated September 23rd, 2018 1,743 Reads share

Top 9 Business Credit Consolidation Solutions for Small Businesses

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Small businesses are faced with a myriad of challenges that will impact their business credit score. They have to drive growth within their companies, take on bigger challenges as they grow, and keep to their promise of delivering on whatever it is their business is offering. In the midst of all that, there is no telling how much money can go into these initial stages of expansion and growth.

When a company finds themselves in a position where they have a lot of debts to pay off, and they are still in need of more money to break through, stress levels skyrocket. For one, former lenders will be wary of investing more if they’ve failed or struggled to keep up with existing debt obligations.

Struggling start-ups can lose credibility fast – with both banks and lenders. They could even reach the point where they can’t take any more loans. In a nutshell, the financial options become more and more limited.

It is at this point in the company’s financial standing that they are advised to look for other drastic, yet effective measures of not only servicing their loans but keeping their heads above water.

What is Credit Consolidation?

One source of confusion regarding credit consolidation is the different ways the term is used. Strictly speaking, you are only consolidating credit debt if you take some debts and pay them off with a new loan.

Your commercial credit consolidation loan options will depend on your specific situation. Your business credit score, your business’s revenues, and the age of your business will all impact the choices that are available to you.

Most borrowers who are good candidates for credit consolidation have a bunch of short-term loans and are looking to combine them into one longer-term loan. Your best options for a business credit consolidation loan are:

1. Traditional Bank Loan

A bank loan is the best way to consolidate credit if you can qualify. Bank loans have the lowest interest rates and most extended terms around, and they also lend large amounts of capital. The APR on bank loans is usually under 10%. That makes them the perfect option for lowering your monthly payments and conserving cash flow. Just be aware that banks only approve the best borrowers.

2. SBA Loan

After a traditional bank loan, the next best option for consolidating credit is an SBA loan. SBA 7(a) loans, the most popular kind of SBA loan, can provide funding up to $5 million. Through this program, the Small Business Administration (SBA) guarantees loans made by banks and other direct lenders. The guarantee can help you qualify where you might not otherwise have qualified for traditional bank financing.

SBA loans, like regular banks loans, have long terms and low interest rates. The interest rate on 7(a) loans currently runs between 7% and 9.5%. But, an SBA loan is still one of the most premium products, and you’ll need strong credit and business finances to qualify.

3. Fundation

Fundation is one of many medium-term online lenders. They provide loans of up to $500,000. If that’s enough money to consolidate your business credit, this lender is worth learning more about. Their rates aren’t as low as bank loan and SBA loan rates, but they are significantly more affordable than short-term loans. The APR ranges between 7.99% to 28.99%. Fundation is also easier to qualify for than a bank or SBA loan. Fundation loans have a term of four years only, so make sure that’s enough time for you to pay back the loan.

4. Funding Circle

Funding Circle is another medium-term business lender. They offer loans of up to $500,000, just like Fundation, but their terms go up to five years. Funding Circle’s interest rates are higher than bank and SBA loan rates, but shorter than short-term loan rates. The APR is approximately 4.99% to 26.99%. It’s also easier to qualify for Funding Circle than for a bank or SBA loan.

5. Lending Club

Lending Club is yet another provider of medium-term loans. They offer slightly less capital than Fundation and Funding Circle, going up only to $300,000. That might take Lending Club out of the running for borrowers who want to consolidate several mid-size loans. But if $300,000 in capital is enough for you, Lending Club has competitive interest rates and terms of up to five years. The APR range is 9.77% to 35.71%.

6. Unsecured Business Credit Consolidation Loans

Unsecured small business credit consolidation loans do not put any of your assets at risk, but generally comes at a higher interest rate than its secured counterparts. So long as your credit history is good, a struggling company can obtain an unsecured business loan for use in credit consolidation. Unsecured business credit loans are available from private lenders and alternative lenders.

7. Alternative Term Loans

Alternative term loans are another good option for business credit consolidation. They often have repayment terms of up to 5 years and interest rates in the mid-teens. That makes an alternative term loan a much more affordable option than the high-interest, short term credit that gives so many business owners headaches.

The minimum qualification requirements are much lower than an SBA loan and the loan can typically be funded in a fraction of the time. General minimum qualification requirements include:

  • 1+ Year in business
  • 600+ Credit score (check your score for free)
  • Seeking at least $5,000
  • At least $25,000 in annual business revenues
  • Business is profitable

These alternative loans are often referred to as medium term loans. Many offer loans up to $500k and terms up to five years. There are a number of alternative term loan providers out there to choose from.

8. Create a Credit Management Plan

Nonprofit credit counseling agencies can help you create a credit management plan. These plans should only be considered if you have exhausted the options above.

Credit management plans aim to consolidate all of your unsecured business credit, such as credit cards, into a single monthly payment. The credit counseling agency will reach out to all of your creditors and ask for concessions on the interest rates they’re charging you. Once agreements are made you will pay the agency directly and they will distribute the payments to your creditors.

While this can get you the credit relief you seek, there are some negative aspects of this option that you should be aware of, including:

It can typically take 3-5 years to repay

Your credit accounts will usually be closed.

Your enrollment into a credit management plan will show up on your business credit report, and it could negatively impact your score.

You may struggle to receive additional borrowing in the future.

One benefit to this option is you can outsource the effort of dealing with creditors. You may want someone else to handle this for you for the simple reason of freeing you up to focus on growing your business. This can be a good solution if you don’t qualify for financing and you’re significantly behind on your payments.

9. Credit Settlement

Credit settlement is an aggressive solution designed for people in a financial hardship. Credit settlement firms negotiate reduced pay-off balances with your creditors. Credit settlement harms your credit rating, but it is the cheapest way to get out of this while avoiding bankruptcy. Credit settlement consolidates your payments, but not your credit.


If you plan to continue operating your business, then you should not fall behind on your current payments. You can choose from various available options available to seek small business credit relief like negotiating or improving your budget. The best option is likely going to be a credit consolidation loan, which can lower your payments and free up your cash flow.

Sherrie Campbell

Sherrie Campbell

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