7 Business Debt Consolidation Options to Recommend When a Bank Declines a Client

What This Is, and What Delancey Street Is Paid

Take the disclosure first. Delancey Street is a settlement company. It negotiates business debt with funders, factors and commercial creditors, it works with a nationwide network of licensed attorneys who handle anything requiring a bar license, it does not practice law, and it originates no credit. Nothing below is advice about your client or about your firm’s obligations. It is a rung-by-rung account of the market underneath a bank, assembled from the counterparty side of several thousand distressed files.

The gap this page fills showed up in the scan. Of the pages ranking for an advisor holding a decline letter, the most complete lists six alternatives without citing a single rule. The only one written to accountants and fractional CFOs spends its compliance section telling you to check your firm’s policies, then offers a 35 percent revenue share two sections later for making the introduction. None of them names the accountancy rule that decides whether you may accept that money, and none of them mentions that the SBA microloan every list recommends is barred by its own program page from paying existing debts.

One structural point governs the ordering. Several rungs consume something the rungs above them require. A factoring agreement and a merchant cash advance are both ineligible for SBA refinancing under SOP 50 10 8, and an equipment lien placed this quarter is subtracted from the collateral an SBA lender values next year. The rung you point a client toward in August therefore decides which rungs still exist in February.

1. The Entry That Retires Balances Instead of Moving Them

The first name on this ladder does not lend money, and ranking it first is only honest if that is said outright. Delancey Street negotiates existing business debt down and closes it out. That is a different transaction from everything else here, not a cheaper version of the same one. A consolidation loan pays your client’s creditors the full outstanding number and charges interest for the service. A settlement attacks the number itself, with no credit pull, no new financing statement on the index, and no additional guaranty signed by anyone.

Priced from the other side of the table, the reason this survives a decline is plain. A lender is being asked to advance every dollar of the balance plus its own margin to a business another underwriter just turned down. A funder weighing a settlement answers a narrower question, about what money today is worth against the cost, the delay and the collection risk of chasing the same business through the same year. In the files this desk works, negotiated resolutions have typically landed between 30 and 60 cents against the balance. That is disclosed experience rather than a forecast, and no outcome is promised.

Where Delancey Street stands relative to you is worth stating flatly, because the one advisor-facing page in the scan leads with a revenue share. Four limits describe the arrangement. No money moves from this desk to you for sending a client, and none moves the other way for an introduction it makes. Fees are split with nobody, whether that person is an accountant, an attorney, a banker or a consultant. Your engagement stays yours to define, run and end, since nothing here funds it, supervises it or tells you what to advise. The only compensation on the file is what the client agrees to pay out of a settlement that has funded.

The honest catch goes in front of your client first. Settling a balance is a credit event, and cancelled business debt is generally includible in gross income under 26 U.S.C. §61(a)(11), subject to the insolvency exclusion at §108(a)(1)(B). A funder that refuses to negotiate can sue. Money that funds a settlement leaves the business now rather than over sixty months. Take the tax side yourself or route it, and route the payment mechanics to counsel, because cancelling an ACH authorization is a legal act under paper the client already signed.

2. The 7(a) Door the Decline Just Opened

Most advisors read the bank’s no as the end of the regulated channel. It is closer to the beginning of one. 13 C.F.R. §120.101 provides SBA business loan assistance “only to applicants for whom the desired credit is not otherwise available on reasonable terms from non-Federal, non-State, and non-local government sources,” and requires the Lender or CDC to certify that it examined availability and holds substantiation in its file. The factors the rule lists are the industry, whether the business has operated two years or less, the adequacy of collateral, and the maturity needed to reasonably assure repayment. A conventional decline is evidence toward that certification, not against the file.

The rule runs the other way too, which is the part worth an advisor’s attention. SOP 50 10 8 turns it into a disqualifier: a project stops being eligible where the borrower’s own numbers would satisfy that lender’s ordinary commercial standards without any federal guarantee behind them. The credit memorandum therefore has to name an identifiable weakness, and the SOP separately forbids resting that paragraph on a credit score policy alone. One question to the banker who declined your client settles whether this rung is live: which factor the memorandum will name.

Two limits decide availability. The SOP excludes merchant cash advances and factoring agreements from refinancing outright, so a stacked client does not reach 7(a) proceeds for those balances however the rest of the file reads, and our page on why SBA proceeds no longer retire advance balances works that exclusion in full. The second limit is calendar. Between the lender’s written refinancing analysis, appraisals where real estate is involved, and agency processing on files that cannot go out under delegated authority, this route suits a client whose debits still leave something in the account each month.

3. Community Lenders, and the Sentence on SBA’s Own Page

Every competitor list reached in the scan puts community development lenders and SBA microloans in the alternatives column. On a consolidation file that recommendation is defective, for a reason the program publishes itself. The microloan page on sba.gov reads: “Proceeds from an SBA microloan cannot be used to pay existing debts or to purchase real estate.” One sentence in the middle of the eligible-use list disposes of the tier for a client whose problem is a debt schedule. The other published terms are modest by design: up to $50,000, an average loan of about $13,000, interest generally between 8% and 13%, and a seven-year maximum term.

What makes this rung hard to advise on is that its underwriting is published nowhere. SBA says its intermediaries “make all credit decisions and set all terms,” so there is no floor to measure a client against. The individual lenders are no better. Three community lender pages were fetched for this page on August 2, 2026. One returned a 503 maintenance stub, one returned a 403 challenge, and one returned a 404 while serving 128,031 bytes of complete site chrome that reads like a live page to anything not checking the status code. No criteria came back, and rather than borrow an aggregator’s figure, this page reports the absence.

Where the tier earns a referral is on purpose rather than on balance. A client who needs $28,000 of equipment or inventory, and who would otherwise buy it with a fifth advance at a factor rate, is the applicant a mission lender was built for. Keeping that purchase out of the stack is worth more to the file than the rate difference, and it leaves the debt schedule where it was rather than one position longer. Ask the intermediary one question before your client spends four weeks on an application: whether it also writes non-SBA paper, and whether that paper permits refinancing business debt.

4. Online Term Lenders, Where the Maturity Does the Damage

This is the rung your client will find without you, and its criteria are published, which makes it the easiest one to screen in advance. Two floors, each taken off the provider’s own site the same morning of August 2, 2026. Fora Financial publishes 6 or more months in business, a 570 FICO score and $240,000 in annual revenue, with amounts up to $1.5 million, terms up to 18 months, and daily or weekly repayment. Credibly publishes 6 or more months, a score of 500 or better, and $15,000 or more in monthly revenue, footnoted on that page to an average across the trailing three months and the most recent month, with amounts from $25,000 to $600,000 and factor rates from 1.11.

What separates this rung from a bank is not mainly the price of money, and reading it as a rate problem is the common advisory error. It is the amortization. Credibly says as much in the cons column of its own product page, under the heading “Factor rates, not interest rates.” The mechanical consequence is that a balance your client hoped to spread across sixty months now clears across twelve to twenty four. Monthly outflow rises even where the cost-of-capital story improves, and a business that could not service a five-year payment is handed a considerably larger one.

So the screen an advisor can run in twenty minutes is arithmetic rather than shopping. Take the total payoff on every position, divide by the term this rung actually writes, add the cost, and set the result beside deposits net of transfers on the last four statements. If it does not clear, no lender here fixes it and the file belongs elsewhere on this page. Our companion page on what to do after a second decline carries the adverse-action side, including what a lender must and need not tell your client about the reasons.

5. Selling the Receivable Rather Than Borrowing on the Business

Factoring is the rung where the client’s own credit stops being the question, which is why it survives a decline that everything else fails. altLINE, a division of The Southern Bank Company, publishes “no minimum credit requirement,” and gives the reason on the same page: factoring “focuses more on the creditworthiness of your customers.” Published pricing is a fee typically in the 1% to 5% range, driven by customer creditworthiness, funding volume, invoice size and age, and whether the client factors the whole ledger or selected invoices. Where the receivables are strong and the balance sheet is not, that is a real answer.

The exchange is the receivable and the customer relationship. Under U.C.C. §9-406(a), paying the assignor discharges an account debtor only up to the moment authenticated notice of the assignment reaches it directing payment elsewhere. Once that letter lands, a customer paying your client discharges nothing. In practice the client’s largest accounts learn about the arrangement and start remitting somewhere else, which is a commercial fact worth raising before the agreement is signed rather than after the first letter goes out. On a non-notification facility the client keeps collecting and remits to the factor, and the price of the facility reflects that.

The forward cost is the one an advisor is best placed to see. A factoring agreement sits on the SOP 50 10 8 list of debt that 7(a) proceeds cannot refinance, so the balance created here does not travel back up the ladder. The receivables pledged are also no longer available to secure the line of credit the client will want when the year turns. Factoring answers a working capital timing problem well and a debt schedule badly, and the distinction usually shows in whether the client is short of cash or short of margin.

6. Refinancing the Iron, and What the Lien Costs Later

Equipment is the asset a declined client usually still controls, and this rung underwrites the asset rather than the borrower. Crest Capital publishes that a business typically needs 2 or more years under current ownership, a solid credit history and a demonstrated ability to make payments. It also publishes that transactions up to $250,000 typically require no tax returns or financial statements, that checking eligibility uses no personal-credit inquiry, and that its equipment financing supports progress payments, refinancing and payoffs, all read on crestcapital.com on August 2, 2026. For a contractor or a carrier with paid-off units, that is cash without a credit conversation.

The exchange is a lien on the last unencumbered thing on the balance sheet, and the cost shows up in a different file. SOP 50 10 8 treats a 7(a) loan as fully secured when the lender holds security interests in all available fixed assets. It values used or existing machinery and equipment at half of net book value, or at 80% where an Orderly Liquidation Appraisal supports the figure, and it subtracts prior liens from whichever number applies. Take $220,000 of net book value. At the 50% figure it supports $110,000 of coverage, and a $90,000 equipment refinance placed today leaves $20,000. That arithmetic produces the collateral shortfall on next year’s SBA application.

The shortfall is where it reaches the owners personally. On a shortfall the SOP requires the lender to take available equity in personal real estate, residential and investment property alike, solely owned by any direct or indirect owner of 20% or more and by guarantors. The lien is limited to the amount of the shortfall and to 150% of the equity, and none is required where equity is less than 25% of fair market value. None of that argues against an equipment refinance. It argues for running the collateral arithmetic before the referral rather than after it, because the schedule the SBA lender applies is published and the client’s asset list is already known to you.

7. Purchase of Future Receivables, and Saying No Out Loud

The bottom rung is the one your client will be offered fastest, and it is not a loan. Expansion Capital Group describes its own product accurately on ecg.com. Revenue-based financing is “a funding model where a business sells a specified percentage of its future receivables for a funder’s principal,” carrying “No Maturity Date,” with the transaction continuing “until the amount of the obligation undertaken is satisfied.” Remittances are weekly or daily and offers run from $5,000 to $500,000. Its published minimums are 6 months in business, $8,000 in monthly revenue and a 500 FICO score. Bitty publishes a business checking account, more than 6 months, $5,000 monthly and a 500 or better score.

Advisors get caught on this rung by product labels rather than by contracts. On the same site, under the heading SBA Business Loan, the identical minimum-requirements block appears: 6 months in business, $8,000 monthly revenue, 500 or better FICO, an active business checking account. No SBA lender underwrites to those numbers. In this tier the label on the page and the operative language in the agreement are written by different people, so read the document your client was sent. Where a commercial financing disclosure statute applies, read that too: Cal. Fin. Code §22802 requires the total dollar cost and the total cost as an annualized rate, signed, before consummation.

What this rung takes is the revenue itself, ahead of payroll and ahead of the vendors. What it forecloses is most of the page above it, because a merchant cash advance is ineligible for SBA refinancing and the remittance is measured against deposits rather than profit. A second position behind the first compounds both effects. Where this is the only rung a client can still reach, the recommendation that serves them is usually to shrink the debt rather than layer onto it, and saying so costs an advisor nothing except a placement worth being embarrassed by.

What Each Rung Takes in Exchange

Set out in one place, the ladder is easier to advise on, because the column that decides most files is the last one rather than the qualification column. Every figure below was read on the provider’s own page or the government’s own page on August 2, 2026. Published criteria in this market move without notice, so re-read the floor the week your client applies rather than trusting any table, including this one.

When the Answer Is to Shrink the Debt Rather Than Move It

Some declines are pricing decisions and some are verdicts, and the difference matters more than any product here. Where a bank declined on maturity, on a policy limit, on an industry it does not serve, or on a documentation gap, the client is financeable and the work is finding the rung that fits. Where it declined because the combined service on existing obligations consumes the cash flow, moving down a tier makes the arithmetic worse, since every rung below a bank shortens the term.

The test is a division problem the client’s bookkeeper can run. Total the payoff on every obligation, divide by the longest term any available rung actually writes, and compare that against deposits net of transfers on the last four statements after payroll, rent and cost of goods. Where the quotient does not clear, no additional borrowing at any price resolves it. The honest recommendation is to reduce the obligations rather than reschedule them, and our page on what a business can do before it qualifies covers the routes that involve no lender at all.

One number should not be quoted to a client, because it does not exist. No lender in this market publishes how often a business declined by a bank is approved on the next rung down, no agency collects it, and the federal small business lending dataset that will eventually carry action-taken data is not yet reporting. What can be said honestly is narrower. A file that failed on coverage fails again on a shorter amortization, and the only rung that solves a coverage problem is the one that lowers the numerator.

Who Should You Call? Our Top-Rated Business Debt Firms

One firm on this list works the entire lifecycle of a business debt file, from stopping the daily debits through attorney-led negotiation, UCC lien removal, and a signed release. The other two cover broader debt categories that often sit alongside the advances. Choose accordingly.