close up man hand opening empty wallet over calculator , debt expense bills monthly and credit card at the table in home office , managing payroll,money risk financial. concept: Pay Off My Credit Card
Derek Tallent
By: dtallent
Read in 14 minutes

Can I use a Business Loan to Pay Off Credit Cards?

Credit cards are very important tools for businesses because they offer instant capital and help build your credit. However, payments can start to add up and end up becoming a huge credit card debt. Can you use a loan to pay off credit cards? Is it a good idea to use a loan for this purpose?

Of course, it is! This is known as debt refinancing, and it’s a very common use for business loans.

This post will discuss this method of paying off credit card debt, the pros and cons of doing so, and even some alternatives.

Black credit card on top of dollars representing a loan to payoff credit card debt

Can I Use a Loan to Pay Off Credit Cards?

If you struggle to keep up with your commercial credit card payments, you may wonder if you could take out a business loan to pay off credit cards.

The short answer is: you can.

It should be mentioned that this is referring specifically to paying off your business credit card with a business loan (personal credit cards and personal loans are a whole different story).

If you need to pay off debt created by a credit card a loan is your best choice. You need to make sure the business loan can be used for debt consolidation, though. Essentially, you will apply for one loan that you can use to cover all of your outstanding debts.

If you need a loan for debt refinancing, Camino Financial is an amazing alternative: our loans are easy to apply for, and our terms are very competitive. In addition, the application won’t even affect your credit score, so you can make sure your finances stay healthy and your future is bright.

Our loans range from $5,000 to $400,000, and they can help you get out of debt or strengthen your business by making savvy investments. Fill an application today.

loan to pay off credit card icon illustration

Use a Loan to Pay Off Credit Cards: Pros and Cons

A debt consolidation loan has its fair share of pros and cons:

Advantages of a Small Business Loan to Pay Off Debt

Here’s why using a loan to pay off credit cards is a good idea:

Pay off debt faster

Depending on how much you owe, paying off your credit card debt might take a long time, even years, especially if you only make the minimum payment. On the other hand, a business loan might allow you to pay off debt faster if it has lower repayment terms.

Easier To Keep Track of Debts

If you have multiple loans and credit cards, it can be a pain to keep track of how much you owe and when on each one. A loan to pay off credit cards means you will only have to make one monthly payment.

Lower Interest Rates

Debt consolidation loans typically have much lower interest rates than regular business loans. This will obviously save you money in the long run.

New Payment Terms

If you are struggling with debt payments currently, it can be a lifesaver to have the different terms that a loan to pay off credit cards brings. In addition, you can have a longer payment term, so you pay much lower monthly payments.

Saves You Money

As a business owner, saving money can be a huge boost to your operations. This is the main benefit of a credit card consolidation loan. If you are smart, you can get a loan with lower rates and payments, so you will have more cash reserves on hand to use.

Helps You Improve Your Credit Score

Using a loan to pay off credit cards can help you in 2 ways:

1. First, you’ll be able to repay your debts, which lowers your credit utilization ratio. And this, in turn, can help boost your credit score.

2. One of the ways your credit score is calculated is with your credit mix, which is the different types of credit and debt you carry. By getting a new type of debt (a business loan), your credit mix will strengthen your score.

Note that not all lenders report timely payments to credit bureaus.

Disadvantages of a Loan to Payoff Credit Card Debt

So, what’s not so good about consolidating credit card debt with a loan?

Very Credit Score Dependent

To get a better loan to pay off credit cards, you will need a high credit score. However, if you have already missed a lot of credit card payments and have a low credit score, you will have a hard time getting lower interest rates.

You Can No Longer Use The Credit Card

Debt consolidation only works if you stop getting any more debt, including your credit card.

Collateral Required

A loan to pay off credit cards might require collateral or some sort of property that the lender can liquidate for cash quickly. This can be bonds, cash reserves, a business vehicle, your house, etc. If you cannot pay back the loan, the collateral will be seized by the lender.

Camino Financial’s small business loans can be used for debt consolidation, and we don’t require any collateral. We want to give you a small business loan to pay off debt.

application for a loan to pay off credit cards with bad credit

There is a lot of intricacies to debt consolidation, but it is well worth the research if you are struggling with your debts. 

Debt Consolidation Loans: A Complete Guide

What Happens if I Can’t Pay Off My Credit Card?

Missing credit card payments will have consequences that will ramp up as you miss more and more payments.

Even missing one payment can significantly impact your business score, as one of the biggest determinants in your credit score is how often you make payments on time. You also may have to pay late fees and deal with increasing interest rates.

If you continually miss payments, the financial company may freeze your credit card. In this case, the company might sell your debt to a collection agency, which may sue you and require you to garnish wages, tax returns, and other sources of income.

Bottom line, whenever you ask yourself, “Should I pay off my credit card?” you’ll know the answer: you need to pay all of your credit cards on time.

Pay Off My Credit Card: Other Options

If you know you are going to miss payments and a loan to pay off credit cards is not an option for you, there are some other alternatives you can use:

Call Your Lender

It is almost always a good idea to contact the credit company and let them know you may not be able to make a payment. Most of the time, they will work with you and either delay the payment for a small fee, renegotiate with you, or allow a partial payment.

They don’t have to do any of these, obviously, but it typically is in their best interest to work with you, so you don’t default on the loan and lose them a lot of money.

Enroll in a debt management plan

There are many firms specializing in debt management for businesses. They can be a great option for you.

Unlike debt settlement (where you offer to settle the loan for less money, which kills your credit score and takes 2-3 years), debt management is where firms negotiate with your lender on your behalf to reduce your loan and come up with an affordable payment plan to pay off your debt in 3-5 years.

While these services do cost money, it can be helpful to have an expert negotiate on your behalf because they will know what is realistic to ask for and how to haggle enough to get you a good plan. They also can provide you with education on saving money and making payments.

Wallet with credit cards and money representing small business loan to pay off debt

Credit Card Debt is Payable: There Are Always Options

Can I use a business loan to pay off credit cards?


Now you know that this is possible and that there are even other alternatives for when you run into troublesome debt.

Hopefully, you don’t ever find yourself in that situation, but at least you will know what to do. At Camino Financial, we always strive to fulfill our motto: “No Business Left Behind,” and a big part of that is offering the best financial products that help our clients.

The loan amount we can offer you ranges from $5,000 to $400,000, plus we offer fixed rates and monthly payments.

The Best Loan to Pay Off Credit Cards

You can use a Camino Financial loan to pay off credit cards and debt consolidation, and we offer great interest rates, longer repayment terms, and transparent pricing. Many of our members have used our small business loans to pay off credit card debt and now are out of debt and successful. That’s exactly what the Reynosos did:

the Reynosos, a couple that used a loan to pay off credit cards

Rafael and María Reynoso own a smog check shop. They contacted Camino Financial when they needed to buy a new smog check machine. This purchase helped them a lot, but there was still something holding back their small business: outstanding credit card debt.

When they realized they could use the loan to pay off credit cards, they instantly got a second small business loan. There were able to repay their debts, and their credit score increased even by 50 points. Now, their business is succeeding in ways they never imagined.

You can do the same and refinance your debts with the help of Camino Financial.

Apply for a business loan with us and be free of debt.


Frequently Asked Questions

How to get a loan to pay off credit cards?

Getting a business loan to pay off credit cards debt is easy with Camino Financial. It just requires 3 easy steps:

  1. Fill our online, paperless application. You’ll instantly know if you’re preapproved.
  2. Share documents and financial records with us so we can prepare the loan amount that best suits your needs.
  3. Receive a loan offer and accept it!

And just like that, you’ll get a business loan with fixed monthly payments, a fixed interest rate, and a loan term that will allow you to repay it comfortably.

Should I be taking out a personal loan to pay off credit cards?

If the credit card debt has become too much for you to handle, then yes, you definitely need to consolidate debt. Paying off your debt with a loan is a great option.

Just make sure that if you get a personal loan, it is to pay off personal credit cards. If the credit card debt you want to consolidate came from a commercial credit card, then you’ll need a business loan to payoff credit card debt.

Where to get a loan to pay off credit cards?

One of the best online lenders is Camino Financial. Their small business loans don’t require you to have a previous credit history (or even if you have bad credit), offer a fixed rate to help you save money, and can give you the loan amounts in as fast as 2 days!

Can I use a small business loan to pay a personal debt?

Unfortunately, you can’t. You can only use a business loan for business purposes. What you’re looking for are personal loans.

Is there a loan to pay off credit cards with bad credit?

If your credit score is really poor, getting a new loan might not be as easy. For example, you might only be able to get a secured loan (that requires collateral) or one that only offers minimum loan amounts.

Getting unsecured loans is not impossible, though. If you have a bad credit score, you might find some lenders that offer installment loans that are willing to work with you and offer you the loan funds you need.


Check if you
qualify for a loan