Managing five different payments, five due dates, and five interest rates is a job in itself — and an expensive one. Debt consolidation rolls multiple debts into a single payment, which simplifies your books and can lower your overall interest cost. Here are four ways to do it and when each fits.
1. A business term loan
The most common approach: take one term loan large enough to pay off your existing debts, then repay it on a fixed schedule.
Why it works: A single fixed rate and payment makes budgeting predictable. If you’re carrying high-interest credit card balances and a mix of other debt, folding them into one lower-rate loan can save real money over time.
Example: Combining $50,000 in card debt at around 20% and $20,000 in equipment debt at around 10% into a single $70,000 term loan at a meaningfully lower rate can cut your total interest substantially.
Catch: Term loans usually want a solid credit history, possibly collateral, and a clear business case. Lenders will look hard at your financials first.
2. An SBA loan
SBA 7(a) loans can be used to refinance and consolidate business debt, often with longer terms and competitive rates thanks to the government guarantee.
Why it works: Lower rates and longer terms can ease cash flow, especially for businesses that don’t qualify for conventional financing.
Catch: The application is more involved and slower than a standard loan. Prepare your documentation and expect the process to take time.
3. A business line of credit
A line of credit isn’t a consolidation loan, but used carefully it can pay down high-interest debt — like card balances — which you then repay over time.
Why it works: Flexibility. You draw what you need and pay interest only on the balance. A seasonal business can clear card debt from a slow stretch and repay during peak months.
Catch: Rates are often variable, and there may be fees. Compare the line’s rate to the debt you’re paying off, and resist the urge to run the balance back up.
4. A balance transfer card
Some business credit cards offer an introductory 0% APR period — often 6 to 18 months — on transferred balances. During that window, every payment goes straight to principal.
Why it works: If you can clear the balance before the promo ends, you avoid interest entirely.
Catch: Transfer fees typically run a few percent of the amount moved, and the rate jumps once the intro period ends. This only works with a firm payoff plan — and missing a payment can void the 0% offer.
Comparison
| Strategy | Best for | Watch out for |
|---|---|---|
| Term loan | A clean, fixed single payment | Credit and collateral requirements |
| SBA loan | Lower rate, longer term | Slower, document-heavy process |
| Line of credit | Flexible paydown | Variable rates, re-borrowing temptation |
| Balance transfer | Small balances you’ll clear fast | Transfer fees, rate after the intro |
Bottom line
Consolidation can simplify your finances and lower your interest cost — but only if the new product genuinely costs less than what you’re carrying now. Add up your current rates and fees, compare them honestly against each option, and pick the one that fits your credit and cash flow.
To see which consolidation options you’d actually qualify for, you can compare your options and get matched for free, with no obligation.
Get our free funding checklist
Free. No spam. Unsubscribe anytime.