Quick answer
A business loan refinance replaces your existing loan with a new one, usually to lower the cost, extend the term, release more funds or escape a lender that wants to be repaid. Alternative lenders refinance businesses that banks will not, including loans in arrears, expired facilities and expensive short-term debt. When the new loan settles, it repays the old one.
Key points
- Replaces an existing loan with a better-fitting one
- Useful for expired, expensive or arrears-affected loans
- Can release extra funds at the same time
- Check break costs before you switch
Reasons to refinance
| Trigger | What a refinance does |
|---|---|
| Loan expiring with no renewal offer | Replaces it before the lender takes action |
| Arrears building | Resets the loan on terms the business can meet |
| High-cost short-term debt | Moves to a longer, cheaper structure |
| Need extra funds | Releases equity or cash flow capacity at the same time |
| Lender relationship broken down | Moves the business to a lender who wants it |
How lenders assess a refinance
They look at why you are refinancing, how the existing loan has been run, and whether the new structure fixes the problem. A refinance that simply delays the same issue is a hard sell. One that cuts repayments, clears arrears and gives a clear path forward is attractive.
For property-secured refinances, no valuation is needed before approval, you can prepay interest or add it to the balance, and terms are flexible. These loans range of $20,000 up to $5,000,000.
Unsecured refinances
If your current debt is unsecured, a new unsecured lender may refinance it on a longer term if the bank statements support it. Several unsecured debts are better handled as a consolidation.
The paperwork
Expect to provide a statement for the existing loan, a written payout figure, identification and bank statements. For property loans, add the rates notice. The outgoing lender’s payout and settlement timing is often the slowest step, so request the payout figure early.
When a lender is pressing you
If you have received default notices or demands, act quickly. A first mortgage refinance can often move faster than enforcement. The page on missed payments on an existing loan explains the options.
An illustrative refinance
A transport company took two short-term loans and a merchant advance during a rough patch. Combined, they took a large slice of every day’s takings. The directors also owned an investment unit with a modest bank loan. A second mortgage over the unit refinanced all three short-term debts into one loan with interest added to the balance, freeing the daily cash flow. Within a year, with the business stable and its file improved, a bank refinance repaid the second mortgage.
Questions to settle before you switch
- What is the exact payout figure today, and does it include break costs?
- What will the new loan cost in total, not just per month?
- Is the new term long enough to fix the problem, not just delay it?
- What security is the new lender taking, and is it the same as before?
- Who coordinates the payout and settlement?
Write the answers down side by side. If the new loan does not clearly improve on the old one, keep looking.
Compare your options
Submit a short enquiry with your current loan details and what you want to change. Asking involves no credit check, a specialist calls you back, and there is no lead selling. Ask about refinancing.
Frequently asked questions
Can I refinance a loan that is in arrears?
Often, yes, especially with property security. The new lender will want to understand why the arrears happened and see a realistic plan.
Will refinancing cost money?
There can be break or discharge costs on the old loan and establishment costs on the new one. Get the payout figure in writing and compare total costs.
Can I refinance and borrow more at the same time?
Yes. Many refinances also release funds for working capital or to clear tax debt, subject to equity or cash flow.
How long does a refinance take?
Unsecured refinances can be quick. Property refinances depend on the outgoing lender issuing a payout figure and attending settlement, though straightforward deals can fund in as little as 24 hours once documents are signed.
Prefer to start now? Enquire here
About 60 seconds. No credit check when you first enquire, and a person who handles unusual deals calls you back.