By Teddy Nykiel

If you’re up to your ears in business debt — whether it’s from one high-interest loan or three — it’s time to re-evaluate.

Having small-business loans or merchant cash advances with annual percentage rates in the double or triple digits can suffocate your cash flow. Refinancing and business debt consolidation are two ways you can cut your interest rates, and online lenders might be able to help. Here’s what you need to know:

Business debt consolidation vs. refinancing

When you refinance business debt, you take out a lower-interest loan to pay off one that has higher interest. Consolidation combines several loans or merchant cash advances into one loan. Of businesses that applied for financing in the first half of 2014, 15% needed debt consolidation or refinancing, according to a survey by the Federal Reserve Banks of New York, Atlanta, Cleveland and Philadelphia.

An increasing number of borrowers with bad credit have multiple high-interest small-business loans and merchant cash advances. This is known as loan stacking and can happen when borrowers fail to qualify for a large, low-interest small-business loan. To compensate, they take out multiple smaller loans with high interest. Jerry Silberman, founder of debt-restructuring service Corporate Turnaround, has seen small-business owners with as many as 10 merchant cash advances.

If you have multiple high-interest small-business loans or merchant cash advances, there’s no way you will be able to qualify for a traditional bank loan to refinance, Silberman says. But many online small-business loans can be used for business debt consolidation and refinancing.

We’ve listed some of your best options. To compare all your loan choices, check out our small-business loans page, where we’ve listed loans based on what you need to qualify.

For businesses that can qualify for the lowest rates: SmartBiz

SmartBiz is an online platform that connects business owners with loans backed by the U.S. Small Business Administration. SBA loans are among the least expensive loan options. You need good credit and a healthy business, and you must meet SBA requirements to qualify for SmartBiz. The lender has noticed more small-business owners using SmartBiz loans to refinance debt than in the past, General Manager Evan Singer said in an email.


• Loan amount: $30,000 to $350,00
• APR: 7% to 8%
• Loan term: 10 years
• Approval time: Within seven days of submitting application
• Read our SmartBiz review

For businesses that want a line of credit and refinancing: Dealstruck

Online lender Dealstruck offers a variety of financing products, including small-business term loans, asset-based lines of credit and inventory lines of credit. About one-third of Dealstruck borrowers use the money for debt refinancing, says Chief Strategy Officer Candace Klein. For those business owners, the lender typically extends a term loan to pay off the existing debt and a line of credit to cover ongoing working capital needs, Klein says.


• Loan amount:$50,000 to $250,000
• APR: 11% to 28%
• Loan term: 6 months to 4 years
• Approval time:Prequalification in minutes, offer letter in two to three days, average of 10 days to funding
• Read our Dealstruck review

For businesses with at least 3 employees: Fundation

Founded in 2011, Fundation offers online small-business loans with terms of up to four years. The lender has a minimum requirement that most lenders don’t: You need to have at least three employees (including yourself) to be eligible. Up to one-fourth of Fundation borrowers use their loans for debt refinancing, a spokesman for the lender said in an email.


• Loan amount: $20,000 to $500,000
• APR: 8% to 30%
• Loan term: 1 to 4 years
• Approval time: Funding as soon as 3 days after submitting application
• Read our Fundation review

For business owners with a 620 personal credit score or higher: Funding Circle

Funding Circle is a peer-to-peer lender offering small-business loans with terms of up to five years. The lender requires borrowers to have at least a 620 personal credit score, slightly higher than the 600 minimum that Dealstruck and Fundation require. (SmartBiz doesn’t have a minimum credit score but typically doesn’t accept borrowers with scores lower than 600.) Although most Funding Circle borrowers use the loan money to grow their businesses, many also use it to refinance debt, Funding Circle’s head of communications, Liz Pollock, said by email.

Funding Circle:

• Loan amount: $25,000 to $500,000
• APR: 7% to 26%
• Loan term: 1 to 5 years
• Approval time: Less than 10 days
• Read our Funding Circle review

The bottom line

If you’re considering business debt consolidation or refinancing, the online loans listed above might be options. Debt refinancing means taking out a new loan to pay off an existing loan at a lower interest rate. Business debt consolidation is a type of refinancing, but it refers specifically to using one new, lower-interest loan to pay off multiple higher-interest loans.

If you meet the minimum requirements, apply for all of these online loans and choose the one that offers you the lowest APR. Unlike with credit cards, applying for multiple loans won’t hurt your credit score because the credit bureaus recognize the value of shopping around for the best rate. As long as you apply for the small-business loans within a short time frame (about two weeks), all of the credit pulls will count as just one hard inquiry.

Find and compare small-business loans

NerdWallet has come up with a list of the best small-business loans to meet your needs and goals. We gauged lender trustworthiness, market scope and user experience, among other factors, and arranged the lenders by categories that include your revenue and how long you’ve been in business.