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The Benefits of Non-Bank Business Debt Consolidation Lending

By Spodek Law Group | February 20, 2024


The Benefits of Non-Bank Business Debt Consolidation Lending

Running a small business can be extremely rewarding, but it also comes with its fair share of challenges. One common issue many business owners face is juggling multiple business loans and debts. From equipment financing and lines of credit to credit cards and vendor accounts, it’s not uncommon for a business to have obligations spread across several different lenders.

Key Benefits of Non-Bank Consolidation Loans

There are several advantages to working with a non-bank lender for a debt consolidation loan, including:

1. Fast Funding

Because they aren’t bogged down by the same bureaucracy as banks, non-bank lenders can often fund loans much faster. You may be able to get approved and receive funds in as little as a few days or weeks. This enables you to consolidate high-interest debts quickly before they spiral out of control.

2. Flexible Qualification Requirements

Whereas banks tend to impose strict criteria, non-bank lenders take a more holistic approach to creditworthiness. They may still review your business and personal credit scores, but will also consider factors like your experience, business viability, and collateral.

This flexible underwriting makes it possible to get approved even if you don’t have perfect credit or meet every typical qualification.

3. Lower Interest Rates

By consolidating multiple high-rate debts into one loan, you may be able to secure a significantly lower interest rate than you’re currently paying. This reduces the total interest fees you pay over the loan term.

Online lenders can often offer lower rates than traditional banks, saving you even more money each month. Be sure to compare interest rates from multiple lenders.

4. Longer Repayment Period

Non-bank lenders may also provide more flexible repayment terms than your current debts allow. Stretching out your repayment period lowers your monthly payment and improves cash flow.

Just be sure the longer term doesn’t negate interest rate savings in the long run. Avoid extending the repayment period just to get lower payments.

5. Personalized Service

Online non-bank lenders provide the convenience of getting funded quickly through technology. However, many also assign you a dedicated loan specialist to guide you through the process.

This provides the personalized service of a community bank with the speed and efficiency of an online lender. Look for a lender that provides individual support.

What Debts Can Be Consolidated?

Most types of business debt can be consolidated, including:

  • Business credit cards
  • Equipment financing agreements
  • Lines of credit
  • Accounts receivable financing
  • Payroll and tax liens
  • Vendor accounts
  • Inventory or purchase order financing
  • Business loans from other lenders
  • Personal loans used for business purposes

As long as the debt is in your business name and used for business purposes, it can typically be consolidated. The main limitation is that mortgage and auto loans usually cannot be consolidated.

What Do Lenders Look For?

When applying for a non-bank consolidation loan, lenders will review certain documents to assess your eligibility. Be prepared to provide:

  • Several years of business and personal tax returns
  • Current profit and loss statement
  • Business bank statements and accounts receivable/payable aging reports
  • Documentation of debts to be consolidated
  • Business plan and cash flow projections
  • Proof of business licenses, insurance, legal status
  • Personal financial information

Providing recent, accurate financial documentation is key. Demonstrating consistent revenue and the ability to repay the loan makes approval more likely.

How Much Can You Borrow?

Loan amounts for business debt consolidation can range from about $5,000 up to $500,000 or more. The amount you qualify for will depend on factors like:

  • Your revenue and expenses
  • Personal credit scores
  • Time in business
  • Cash flow
  • Collateral

Work with a loan officer to determine the optimal loan amount based on your goals and financial circumstances. Avoid borrowing more than you need.

The Loan Application Process

Applying for a non-bank consolidation loan is relatively straightforward. Here are the basic steps:

  1. Choose a lender – Compare options from various online lenders to find the best rates, terms, and service.
  2. Submit your application – Complete the lender’s online application and provide requested documentation. This kicks off the underwriting process.
  3. Get approved – If approved, you’ll receive loan terms including the amount, rates, fees, and repayment schedule.
  4. Accept the offer – Review the terms carefully and accept the offer if satisfactory. Sign the loan agreement.
  5. Fund and consolidate – The lender disburses funds directly to your old creditors to pay off debts. You begin making a single monthly payment.

From application to funding, the process can be completed in as little as a few days for the fastest non-bank lenders.

The Pros and Cons of Consolidating

While consolidating business debt has many benefits, there are also some potential drawbacks to keep in mind:


  • Lower monthly payments
  • Lower interest rate
  • Simplified finances
  • Improved cash flow
  • One payment vs. multiple
  • May improve personal credit


  • Closing costs and fees
  • Risk of higher total interest costs
  • Temptation to take on more debt
  • Lose benefits/rewards of old accounts
  • Negative impact if miss new payment

As with any major financing decision, be sure to think through both the positives and negatives before committing to a consolidation loan.

Alternatives to Business Debt Consolidation

If consolidation isn’t the right solution for your situation, some alternatives to consider include:

  • Prioritizing and aggressively paying off debts
  • Negotiating lower rates with current lenders
  • Using earnings or injections of capital to pay down debts
  • Working with a credit counseling agency
  • Exploring balance transfer credit cards
  • Liquidating assets to pay off obligations

Assessing all your options will help you find the right debt relief strategy for your business.

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