Refinancing refers to the process of taking out a new loan to pay off other outstanding loans. Businesses typically use refinancing to get a better deal on their interest rates or to consolidate their debt.
What happens when you refinance?
Once you get the new loan, you’ll use the funds to pay off the outstanding debt. Ideally, the new loan has better terms than the previous loans.
When should I refinance my business loan?
Consider refinancing if you’re looking for improved interest rates or monthly payments. Evaluate your terms and determine if you’re able to secure a better offer from a different lender.
Can you consolidate business debt?
When you consolidate business debt, you take out a new loan to pay off separate, existing loans. Approach a lender to determine whether or not refinancing your business debt is right for your SME.
How do you refinance a commercial loan?
To prepare for refinancing, you should follow the same steps you take when applying for other forms of business finance. An audit of your existing debt is the best place to start.
Next, determine your funding need and examine the options available.