Business Debt Consolidation Programs: 6 Structures and Who Runs Them

The phrase "business debt consolidation program" names at least six different arrangements, run by six different kinds of operator, paid in six different ways. Two of them lend money. One of them adds a creditor. One was designed for household credit cards and fits a business only at the edges.

The useful way to sort them is by the operator: who holds the money, who is paid, and by whom. Each structure below is described in those terms, with what the governing rules say about its charges where the rules say anything at all.

1. Loan Consolidation Is Run by Lenders and Priced in the Note

The plain version is a new loan whose proceeds retire old ones. A bank, credit union or online lender runs it, and its charges appear in the promissory note and the closing statement as interest, origination fees and, where the note provides, prepayment charges.

Several states now require the price to be shown in a common form. New York's Commercial Finance Disclosure Law, through regulations the Department of Financial Services announced on February 1, 2023, requires standardized disclosures including finance charge and APR for covered commercial financing of $2.5 million or less. California's Financial Code section 22802 requires covered providers to state the total dollar cost and "the total cost of the financing expressed as an annualized rate." When a program calls itself consolidation and cannot produce those figures, the owner has learned something about the program.

2. Debt Management Plans Are Run by Credit Counselors, for Personal Debt

A debt management plan is the structure most people picture when they hear the word "program." The FTC's description of how these plans work is precise: "The counselor develops a payment schedule with you and your creditors" and "uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills." The debts named are household debts. Merchant cash advances, equipment notes and business lines are not what these plans were built to carry.

State law follows the same outline. New York treats paying a planner who distributes funds among a debtor's creditors as budget planning, reserves that business to licensed not-for-profit entities under Banking Law section 579, and reaches contracts with individuals resident in the state. Texas regulates debt management services for individual residents under Finance Code chapter 394. A sole proprietor with personal cards may fit; a limited liability company with three advances generally does not.

The FTC's advice on cost applies to any counselor: get "a specific quote in writing for any one-time or monthly fees," and do not treat nonprofit status as proof that a service is free, affordable or legitimate. The warning was written for consumers. It reads as well at a business desk, where the same organizations sometimes appear offering to help with obligations their plans were never designed to hold, and where a monthly fee on a plan that cannot include the largest debt is a fee for very little.

3. Settlement Sometimes Travels Under the Consolidation Label

Some of what is advertised as business debt consolidation is debt settlement: a company negotiates with creditors to reduce balances, and the business pays the reduced amounts over time or in lump sums, with no new loan anywhere in the structure. The label is borrowed because "consolidation" sounds like financing and "settlement" sounds like default, and the owner who reads the agreement will find that the company's fee, the timing of that fee, what happens to enrolled balances while negotiation proceeds, and whether any creditor has agreed to anything at all are the terms that describe the actual program, whatever its banner says.

The fee rules here are narrower than many owners assume. The federal Telemarketing Sales Rule bans advance fees for debt relief services, but calls to a business fall within a business-to-business exemption for that ban; since May 16, 2024, the misrepresentation provisions of the rule, including false claims about how much a customer will save, do reach business telemarketing. California's Debt Settlement Practices Act defines debt as personal, family or household obligations of a natural person. For a company's advance, the fee is set by contract.

Delancey Street belongs in this category and does not describe itself as a lender. Its work concentrates on merchant cash advances, and it is a settlement business, not a law firm; the first review of contracts and bank activity is confidential and costs nothing, and legal matters are referred to independently licensed attorneys. The Delancey Street review is a place to see settlement named as settlement, and to hear which files belong with bankruptcy counsel instead.

The honest programs in every category share one habit: they call the transaction by its name.

4. Reverse Consolidation Is Run by a Funder, and the Funder Is the Product

Reverse consolidation is offered by merchant cash advance funders. The new funder deposits money into the business account on a schedule, collects its own debits on a faster schedule, and leaves the business to keep paying its existing positions out of those deposits. It resembles a man bailing a rowboat with a second rowboat. The charge is the new advance's own purchase price, stated as a factor or payback amount in the new agreement.

5. Broker Programs Are Run by Intermediaries Paid by the Other Side

Some consolidation "programs" are brokers that place the business with a lender or funder and are compensated by the party they place it with. The broker controls neither the terms nor the approval. The FTC's endorsement guidance treats material relationships that affect credibility as something to disclose, and Texas Finance Code chapter 398, effective September 1, 2025, requires covered sales-based financing offers under $1 million to disclose broker compensation. Whether a broker who is paid more for placing one product than another can ever be a neutral adviser on consolidation is a question the compensation disclosure raises and does not settle.

6. The SBA Runs No Consolidation Program, Though Its Guaranty Runs Through Many

There is no SBA consolidation program in the sense owners search for. The SBA guarantees 7(a) loans that participating lenders make, and refinancing current business debt is among the permitted uses, subject to rules that exclude active merchant cash advances and require a lower payment. The lender runs the loan; the charges are in the lender's note.

What the SBA runs directly is advice. Its local assistance network offers "free or low-cost counseling and training," and SCORE mentors advise "at no cost." None of them negotiate with creditors.

They will read a debt schedule, which is where most programs should begin.