What is a business debt consolidation loan?

When consolidation makes sense

Debt consolidation makes sense when you're carrying three or more simultaneous debt obligations — especially if any are MCAs with daily or weekly holdbacks — and your combined monthly debt payments exceed 40% of gross revenue. The strategic goal is threefold: reduce total monthly payment burden, simplify cash-flow management to a single predictable payment, and lower your total interest expense over the life of the debt. If post-consolidation DSCR doesn't improve to at least 1.25x, lenders will decline the consolidation application — meaning the current debt load is too heavy for any refinance path without additional revenue growth.

Structure 1 — Single term loan replacing multiple debts

The most common consolidation structure: a single new term loan large enough to pay off all outstanding obligations simultaneously. The new lender requires payoff letters from each existing creditor; they wire payment at closing. Your obligations are then consolidated into one monthly payment at the new loan's fixed or variable rate. Online and specialty lenders offer consolidation term loans from $50K to $500K at 18–40% APR for businesses with 650+ FICO and 1+ year of operating history. Terms typically 2–5 years.

Structure 2 — SBA 7(a) refinance route

For businesses that qualify, SBA 7(a) is the cheapest consolidation vehicle. The SBA explicitly authorizes 7(a) proceeds to retire existing high-cost business debt. Maximum loan $5 million; rates prime + 2.25–4.75%; terms up to 10 years. Requirements: 680+ FICO, 2+ years in business, $250K+ annual revenue, documented debt schedule, and DSCR ≥ 1.25x post-consolidation. SBA consolidation takes 45–90 days — not appropriate for urgent liquidity needs.

Structure 3 — Balance-transfer business credit card bridge

For smaller debt stacks (under $50K), a balance-transfer business credit card with a 0% promotional APR (typically 9–15 months) can serve as a low-cost consolidation bridge. This only works for debt that can legally be paid via credit card — most MCAs cannot be paid this way. After the promotional window closes, any remaining balance converts to the card's standard APR (typically 20–30% variable). Use this approach only with a credible plan to pay off the balance within the promotional window.

What lenders look for in consolidation underwriting

Consolidation lenders underwrite on three dimensions: (1) complete debt schedule — every outstanding obligation with lender name, current balance, monthly payment, and maturity date; (2) post-consolidation DSCR — your net operating income divided by the proposed new monthly payment must exceed 1.25x; (3) credit profile discipline — lenders want to see that the debt accumulation was driven by business growth or an isolated event, not a pattern of borrowing against declining revenue. Businesses with stacked MCAs from a downward revenue trend face harder scrutiny than those with MCA debt from an expansion phase.

Apply at ClearValue Lending

Start. Your file routes to the funding partners best matched to your current debt profile, DSCR, and consolidation goals. ClearValue Lending is a funding platform, not a lender or financial advisor.