As a small business owner, entrepreneur, or mid-level manager trying to get their company up and running, it can take a lot of work to pay back debts, secure the necessary capital to continue growing, and pay your employees fair wages. Studies have shown that almost 60% of small businesses reportedly have their long-term debt continually increase within the year.
Therefore, new business owners are looking for ways to minimize debt, make one-time purchases, and get some relief so they can break into their niche market. The best way to achieve some relief from an ever-challenging business market is to find business debt consolidation loans.
What is Business Debt Consolidation?
Business debt consolidation is very similar to personal debt consolidation. It helps small business owners pay off multiple other areas of debt and loans so they can continue funding their operating expenses, make one-time purchases, expand their business, and repay investors.
Business owners can acquire a consolidation to focus on paying off a singular loan instead of spreading their money between multiple loan sources to minimize interest payments and a variable APR.
Business debt consolidation allows business owners to focus their repayment plan on a singular loan with a monthly fixed rate. It also offers new owners the flexibility to change the repayment period, interest rates, or both to fit their current financial situation.
Benefits of Business Debt Consolidation Loans
Although it can be scary to ask for another loan after you are already in debt, business debt consolidation loans are helpful for new business owners to reduce their interest rates, focus their energy in one place, simplify their payment plans, and get on top of their finances.
- Low interest rate: Business debt consolidation loans have a very low interest rate compared to other short-term loan options or debts. Businesses currently paying high interest rates on lines of credit or business credit cards should consider consolidating these high APR debts into a loan with a lower interest rate.
- One loan: New business owners might have multiple debts that seemingly never decrease. Business line consolidation offers them the chance to combine their debts into a single loan, which makes repayment and organizing finances much easier.
- Simplification: Making multiple payments, splitting costs between different bank accounts, and using multiple business credit cards can be confusing, time-consuming, and costly. Consolidate your debts into one financing option to simplify your finances.
- Faster: along with being simpler, debt consolidation loans are faster when repaying your debt. You will have a lower monthly payment and interest rate and, therefore, an easier time paying off the money you owe.
- Credit score: Lastly, debt consolidation can boost your business and personal credit score if you can make consistent payments over time to reduce debt.
Business Debt Consolidation Options
Suppose you want to use debt consolidation to keep your business running. In that case, there are a few methods and types of business loans to consider as a new business owner.
Traditional Loans
Traditional banking institutions offer small business owners fair loan terms and lower interest rates compared to other, more costly options. However, they are often harder to acquire than other types of funding. To apply for a loan from a bank, business owners should have positive cash flow, excellent credit, and have been in business for 2+ years.
Business Lines of Credit
A second option similar to a business credit card or personal credit card is a business line of credit. This lets you spend, withdraw, and transfer funds as needed. You then have to pay interest on the amount you owe every month to the financial institution, operating extremely similarly to a personal credit card.
The drawbacks of a business line of credit include multiple fees and higher interest rates, which can make it challenging to pay back in a timely manner.
SBA Loans
Small Business Administration loans are backed by the government and provided by authorized lenders who can offer low interest rates to new businesses. However, most of these authorized lenders want collateral or a ‘guarantee’ that their money will be paid back in a timely manner, which often requires excellent credit scores and ample paperwork to prove trustworthiness.
Private or alternate lenders
The final financing option for business debt consolidation loans is private or alternate lenders who are more open to financing smaller businesses, unique business opportunities, or businesses they are personally invested in. Small business owners will often find luck with crowdfunding, peer funding, or online lenders with similar interests.
Best Business Debt Consolidation Loan Options
Need help consolidating your debts? Check out these high-end debt consolidation loan options to help you get back on your feet.
OnDeck
OnDeck is a versatile online financing option that provides two options for small business owners:
- OnDeck Line of Credit: A revolving credit line that lets business owners withdraw anytime; offers up to $10k in credit limits; flexible repayment terms.
- OnDeck Term Loan: Lump-sum of cash; up to $250k; repayment terms up to 24 months; great for large investments.
OnDeck is an excellent option for small businesses that need fast or consistent funding. This debt consolidation option does not check the business or personal owner’s credit history. Plus, it provides fast financing immediately to the business’s account.
Lastly, OnDeck funding can be used to build a business credit history to help with future payments and potential loan applications.
Minimum Requirements:
- 1 year in business
- FICO Score >625
- $100k annual revenue
- Business checking account
American Express Business Line of Credit
American Express offers a business line of credit that helps small businesses develop into larger corporations, expand their target market, or even open a new physical store.
The perks of this business line of credit are that it offers a fast and easy application process for a real-time decision. Plus, it provides flexible access to your funding without any repayment penalties. Business owners can also choose between multiple term length options, ranging upwards of 24-month loan repayment choices, for flexible financing.
Lastly, American Express offers an instant deposit so that funds are available immediately for a big one-time purchase. Owners can choose between credit lines between $2,000 and $250,000 that will be deposited into their business bank account as soon as possible.
Minimum Requirements:
- 18+ years old
- 1+ years in business
- FICO Score >660
- >$3,000 monthly revenue
Bluevine
Bluevine helps small businesses grow with a stable line of credit that won’t impact their current credit score. It also provides instant access to funds with a Business Checking account directly from Bluevine, so owners can withdraw or transfer money within minutes.
Bluevine offers credit lines upwards of $250k for businesses looking to pay for hefty one-time investments or expand their business. You can apply for an extensive credit line and have constant access to ongoing capital to improve your business's cash flow, cover one-time purchases, and grow your company.
The main perks of choosing Bluevine over other funding options for debt consolidation are that they offer discounted rates, instant access, high-yield interest, and FDIC insurance.
Minimum Requirements:
- $10,000+ in monthly revenue
- FICO Score >625
- 1+ years in business
- Corporation or LLC
- No bankruptcies within the last year
- Operating in eligible U.S. state
National Funding
The last option for business loans for debt consolidation for your new company is National Funding, a financing option that makes getting small business loans fast, customized, and easy.
National Funding offers a quick turnaround, answering your loan request in as little as 24 hours. You can apply for a loan upwards of $500,000 to grow your company, cover one-time expenses, and pay your staff.
Business owners can also choose from either Small Business Funding loans or Equipment Financing to help keep their business growing. Small Business Funding provides cash for any business purpose, flexible terms, and a very short turnaround time. On the other hand, Equipment financing is a great solution for owners who need to purchase equipment or technology upwards of $150,000.
Minimum Requirements:
- 6+ months in business
- $250,000+ in annual revenue
- Business bank account
- Decision made within 24 hours
Business Loans Debt Consolidation Options - Let us Help You
Paying back debts, acquiring funding to grow your business continually, and paying your staff can be extremely costly, time-consuming, and stressful for a new owner. You want to make sure you are making the right financial moves to improve your business continually, make hefty one-time purchases to improve your products, and treat your employees fairly.
If you need help figuring out how to fund your loan refinancing and keep your business in the green, contact us today at Business Loans. We offer multiple funding options to help fuel your business, providing you with personalized options that are unique—just like you.
We use high-end technology to match you with the right lending partners using our vast network of professionals who can help you with your capital requirements. We stay on top of the ever-changing loan standards so that you can rest easy.
