Small businesses struggling with short-term debt and high-interest rates can reduce their monthly payments significantly by consolidating. Our small business debt consolidation calculator helps businesses estimate how much they could potentially save with a consolidation loan. The calculator will show your potential savings based on the interest rate and loan term you enter.
A Small Business Administration (SBA) loan is typically the best option to consolidate expensive short-term debt because SBA loan interest rates are low and offer long repayment terms. Our recommended SBA loan provider is SmartBiz, which can get you funded for up to $350,000 in as fast as 30 days. You can prequalify online within a few minutes.
How to Read Your Debt Consolidation Calculator Results
- Amount to be consolidated: This is the total amount of your debt balances plus additional funding needed and is equal to your consolidation loan amount.
- Current monthly payment (cumulative): This is the sum of your monthly debt payments based on the figures entered into the calculator.
- Estimated monthly payment on consolidated loan: This is the estimated monthly payment amount of your consolidated loan based on the loan amount, the interest rate, and repayment term entered.
- Change in monthly payment: This value is the difference between your current total monthly payment and the estimated payment on the consolidated loan.
- Next steps: Once you have determined whether or not consolidating your business debt can improve your cash flows, you can evaluate your consolidation loan options and begin applying to refinance a business loan. If it doesn’t appear that consolidation is right for you, you may want to consider other options for small business debt relief.
How the Small Business Debt Consolidation Calculator Works
The small business debt consolidation calculator will help you calculate the potential monthly savings your business could see by consolidating your business loans. Input your existing debt and monthly payments, add any additional borrowing you need, and the calculator will estimate your total consolidation loan size and monthly payment.
While nearly any business debt can be refinanced, the largest benefits from consolidation come from lowering interest rates and extending the length of your payment terms. This is why the calculator only calculates 10-year term loans. SBA loans, offering repayment terms up to 10 years, are typically the most popular consolidation option for all forms of business debt.
Debt Consolidation Calculator Inputs
To get the most accurate calculations for a debt consolidation loan, you will need to input a few different values. You will need to know the current balances of your business debts, the current monthly payment amount for each debt, the amount of additional financing you need, and the proposed interest rate and the repayment term of the new loan.
Current Debt Balances
There are four fields in which you can enter the current balances of your debts. We’ve included input fields for term loan balances, credit card balances, merchant cash advance balances, and other balances. In each of these fields, you should enter the current remaining balance for each type of debt.
Current Debt Monthly Payment Amounts
Similar to the current debt balance fields, there are four fields in which you can enter the amounts of your current monthly debt payments. There are input fields for term loan payments, credit card payments, merchant cash advance payments, and other debt payments. In each of these fields, you should enter the amounts of the corresponding monthly payments.
Additional Funding Needed
If you are going to be applying for additional funding to be included in your debt consolidation loan, enter the additional amount in this field. This will increase your loan amount to cover your current debt balances as well as the additional funding you require.
Interest Rate on New Loan
If you know the interest rate for the loan product you will be using to consolidate your debt, you can enter that rate, or you can enter an estimated rate. Changing the interest rate in the calculator will change the estimated loan payment. If you are curious to see what effect different interest rates would have on your consolidation loan, you can run the calculator multiple times with different rates.
Repayment Term of New Loan
In this field, you will enter the repayment term in years of the consolidation loan. The longer the repayment term, the lower your payments will be. Similar to the interest rate field, if you want to test the effect of different repayment terms—some lenders offer various term options—you can run the calculator multiple times varying the term.
Debt Consolidation Calculator Outputs
The debt consolidation calculator generates four outputs based on the data you input. The most important of these outputs is the estimated monthly payment on the consolidated loan. The calculator also provides you with the amount of the consolidation loan, a sum of your current monthly payments, and a calculation of the difference between the estimated payment and your current debt payments.
The outputs produced by the loan consolidation calculator are the amount to be consolidated, the current monthly payment (cumulative), estimated monthly payment on the consolidated loan, and change in the monthly payment.
Amount to Be Consolidated
The amount to be consolidated is a total of the balances of your current debts plus any additional financing you input. This is the amount of the consolidation loan on which the estimated monthly payment is based.
Current Monthly Payment (Cumulative)
The current monthly payment is a cumulative total of the various debt payments you entered into the inputs and includes term loan payments, credit card payments, merchant cash advance payments, and other debt payments.
Estimated Monthly Payment on Consolidated Loan
The estimated monthly payment on the consolidation loan is based on the amount to be consolidated, and the interest rate, and repayment term that you input.
Change in Monthly Payment
The calculated change in monthly payment is the difference between your current monthly debt payments and the estimated payment on the consolidated loan. If a negative value appears in this field, it means that the consolidation loan payments will be more expensive than your current monthly debt payments.
When & How to Use the Loan Consolidation Calculator
Using the small business debt consolidation calculator can help evaluate whether or not a consolidation loan can lower your monthly payments. Whether you already have a specific loan in mind and know the interest rate and term you have been offered, or you just want to test out different options, you will be able to see how the estimated payment compares to your current monthly debt.
What’s Not Included in the Loan Consolidation Calculator
The loan consolidation calculator does not take into account any fees associated with the new loan you are considering. Loan fees are either payable upfront to the lender or deducted from the loan proceeds. You will need to inquire with your lender as to which method they use as this may affect the amount of the loan you need as well as the estimated payment.
Small Business Debt Consolidation
Small business debt generally should be consolidated whenever you can qualify for a more affordable loan than the combined debt you currently service. Consolidating business debt can help you save money, and it can help you save time managing the debt. Consolidation loans typically help you cut many debt providers and payments down to one.
The three types of small business debts that are consolidated commonly are short-term business loans and lines of credit, merchant cash advances, and small business credit cards.
1. Short Term Business Loans & Lines of Credit
Short term loans and business lines of credit typically require expensive payments due to their high annual percentage rate (APR). They often require borrowers to make weekly or even daily payments on what is owed. Most short-term loans are designed to be paid off within one year.
2. Merchant Cash Advances
A merchant cash advance is a loan secured by a fixed percentage of your daily credit card and debit card receipts. That percentage is paid to the merchant cash advance company every day until the loan is repaid, with a maximum repayment period of two years. A merchant cash advance is generally used as a last resort financing option.
3. Small Business Credit Cards
Business credit cards can be a good source of initial financing. We recommend getting business credit cards to use as a small line of credit for consistent cash flow gaps or to have on hand for unexpected expenses. Many have a 0% introductory period that you can use for free financing as long as you pay back your balance during that period.
However, some borrowers aren’t able to pay back their balances in time. This is where these credit cards can become expensive with APRs between 12% to 29%. Having more than one card with a significant balance can make this financing option burdensome to your business.
Common Consolidation Loans
A small business consolidation loan can lower your monthly payments and free up additional cash flow for your business to use elsewhere. It typically does this by combining multiple debts with one simple loan that has a single monthly payment. No more juggling multiple payment dates. No more weekly or daily repayment schedules.
The two primary types of small business consolidation loans are SBA loans and term loans.
1. SBA Loans
An SBA loan is guaranteed by the SBA, making it easier to qualify for long repayment terms and lower interest rates than other loans. These loans are going to be difficult to qualify for, and they can take a lot of time to get funded, such as 45 to 120 days or more. They’re typically worth it because of the cost savings to your business.
2. Term Loans
Both traditional banks and alternative lenders offer general term loans. If you’re a prime borrower, traditional banks will typically offer repayment terms up to five years with competitive rates to the SBA loan. However, these are more difficult to qualify for and can take just as long to get as an SBA loan. Alternative term loans are more expensive, with shorter repayment terms.
Qualifying for a Business Consolidation Loan
The qualification requirements for a debt consolidation loan varies by loan type and the lender. In general, a lender is going to base loan eligibility on your personal credit score, time in business, and annual revenues. Some lenders consider other factors—such as debt service coverage ratio or loan-to-value (LTV)—when determining eligibility.
Consolidation Loan Comparison: SBA Loans vs Term Loans
Minimum Credit Score
Minimum Annual Revenue
Minimum Time in Business
1 to 5 years
$30,000 to $5 million
$5,000 to $300,000
7% to 11%
9% to 36%
0% to 4%
SBA guarantee fee of 2% to 3.5% on loans above $150,000
1% to 7%
Time for Approval
As fast as 1 week
Prequalify in minutes, approved within 1 week
Time to Receive Funds
An SBA loan typically offers the lowest monthly payments through their low-interest rates and long repayment terms of up to 10 years. However, you may endure a lengthy process to obtain one due to the large amount of paperwork involved. That’s why it’s important to have a partner, like SmartBiz, who can streamline this process and get you funded faster.
How to Consolidate Small Business Debt
Debt relief can be very beneficial to your business, but there are many moving parts. The more loans you’re consolidating, the more complicated it can be. You will need to make sure you have accurate data from each of your current lenders, and there will be a substantial amount of paperwork to collect.
Breaking down the consolidation process can make it much simpler. Refinancing business debt starts with collecting all the documentation your lender will require to process your application.
SBA Loan Consolidation Required Documentation
SBA loans generally require more documentation than other term loans. Due to the length of time that it can take to get funded for an SBA loan, you don’t want to slow down the process by not being prepared. Accumulating all of the right documentation upfront can speed up the process and prevent delays from occurring.
Here is a general list of documents required for an SBA loan:
- Business financials (past two years)
- Profit and loss (P&L) statement (past two years and year-to-date)
- Projected financials (looking forward one to three years)
- Business tax returns (past two years)
- Personal tax returns (past two years.
- All business licenses
- Business overview and history
- All business leases
- Business ownership information
- Loan application history
- Resumes of owners
The SBA loan application process also requires you to fill out various SBA forms, depending on your personal or business situation. We have also not included any additional documents needed for your specific financial situation―like if you own rental properties or other businesses.
If this sounds time-consuming to you, then we recommend partnering with SmartBiz to process your SBA loan. They will handle most of the administrative headache for you and can get you funded for up to $350,000 within 30 days.
Monthly Payments vs Total Cost of Capital
It’s important to understand how much any financing is going to cost you now, but it’s also important to know how much it will cost you through the length of your repayment term. Sometimes a loan with a higher interest rate has a cheaper total cost of capital than a low-interest rate loan because of the length of repayment.
SBA loans are much more affordable per month than other term loans, but depending on what your goals are, you may want to use an SBA loan calculator to make sure that the total cost of capital is also affordable.
In the table below, we show you one example of how an SBA loan could be slightly more expensive if you take the full repayment term to pay off each loan, but that it’s also significantly more affordable every month.
Business Debt Consolidation Total Cost of Capital Example
3 years (1 to 5 years)
Total Cost of Capital
An SBA loan could potentially cost you more in the end if it has a substantially longer repayment term, but the monthly payments are going to be much more affordable. This typically achieves the goal of debt consolidation loans, which is to free up more cash flow every month.
Pros & Cons of Debt Consolidation
Debt consolidation can be beneficial to your business, you can lower your interest rates and monthly payments, and simplify the management of your cash flow. However, there are costs involved in getting a new loan, debt consolidation may not save you money over time, and it won’t fix all of your financial problems.
Pros of Debt Consolidation
Some advantages of debt consolidation include:
- Lower interest rates: Consolidation loans generally have lower interest rates than you may currently be paying on your existing debts.
- Lower monthly payments: As a result of lower interest rates and longer repayment terms, your total monthly debt payment should be reduced.
- Simplified cash flow management: When consolidating debts, you convert multiple debts into one loan. This means you only have to make one payment to one creditor, rather than multiple payments to multiple creditors.
Cons of Debt Consolidation
Some disadvantages of debt consolidation are:
- Refinancing costs: In general, there are fees involved with obtaining financing. These could be significant depending on the lender and the amount of the loan. Be sure to factor any fees into consideration when deciding whether or not to refinance and consolidate debt.
- It won’t solve all your financial problems: If you are finding that you have an insufficient cash flow to meet your current debt obligations, consolidating may help you reduce the amount you are paying each month toward your debts. However, it will not fix the cause of the cash flow problem, such as overspending or a reduction in income.
- It won’t always save you money: It is possible that consolidating your debt will not save you money, even though your monthly payment is reduced. Even with a lower interest rate, an increase in the term of your debt could equate to an overall higher cost of capital.
If your business currently has high-interest debt with short repayment terms and weekly or daily repayment periods, consider consolidating your debt. A small business consolidation loan gives you just a single monthly payment to worry about and will likely require much lower monthly payments.
An SBA loan generally gives small business owners the lowest monthly payments and should be considered whenever consolidating business debt. SmartBiz can fund debt consolidation loans up to $350,000 for businesses that have at least two years of business operations years, a credit score of 680 or greater, and are profitable. Prequalify online within a few minutes, and you could get funded in as fast as 30 days.