Funding purpose
Business finance for refinancing business debt
Refinancing is worth doing when the numbers genuinely improve, not just when the repayment looks smaller. The total cost is the test.
Business debt refinancing is replacing an existing facility with a new one to lower the rate, extend the term, release equity or consolidate several debts into a single repayment.
There are four honest reasons to refinance a business facility. The rate has fallen or your position has improved enough to qualify for better pricing. The term is too short and the repayment is choking cash flow. There is equity in an asset that could be released. Or several facilities have accumulated and one repayment would be simpler and cheaper than five. Any of those can justify the exercise. What does not is a smaller repayment achieved purely by stretching the term, where the total interest paid increases substantially.
The costs of refinancing are real and need to be in the comparison: early termination or break fees on the existing facility, establishment fees on the new one, valuation costs on property, and PPSR and documentation charges. On asset finance there may also be a payout figure higher than the balance you expected. We put the current total remaining cost next to the proposed total cost so the decision is made on a like-for-like basis. Sometimes the answer is that refinancing is not worth it, and we will say so.
The cash-flow pattern we plan around
Existing commitments consuming more cash flow than the current trading position warrants, often because facilities were taken when the business was smaller or its credit position weaker.
What refinancing business debt typically fund
- Lowering the rate on existing business debt
- Extending the term to reduce weekly or monthly repayments
- Consolidating multiple facilities into one
- Releasing equity from owned equipment or property
Documents lenders usually ask refinancing business debt for
- Current loan contracts and payout figures for each facility
- 6–12 months of bank statements and latest financials
- Details and condition of any asset or property offered as security
Finance options for refinancing business debt
Business debt consolidation loan for refinancing business debt
Where a business is carrying several short-term facilities with daily or weekly repayments, consolidation is usually the single most effective thing that can be done for its cash flow. One repayment over a longer term replaces four aggressive ones.
Secured business loan for refinancing business debt
Refinancing unsecured business debt onto a property-secured facility produces the largest cost reduction available in Australian business lending — often halving the rate and doubling the term. It also converts debt that could not touch your home into debt that can.
Chattel mortgage for refinancing business debt
Equipment and vehicle facilities are routinely refinanced, either to lower the rate as your credit position improves or to release equity from an asset that is worth more than the balance owing. A truck bought three years ago on a short term at a high rate is a common candidate.
Sale and leaseback for refinancing business debt
Where equipment is owned outright, a sale and leaseback releases that capital without interrupting the work the machine is doing. For a business that has spent years paying assets off and is now short of working capital, it converts the balance sheet back into cash.
Business line of credit for refinancing business debt
Refinancing a stack of term facilities into a single revolving limit changes the shape of the obligation as well as the price: instead of fixed repayments regardless of trade, you draw and repay with the cycle. That suits a business whose original borrowing was really covering recurring timing gaps that were misdiagnosed as one-off needs.
Commercial property loan for refinancing business debt
Commercial property facilities are often set on shorter review periods than residential loans, and it is worth testing the market at each review rather than rolling over automatically. Refinancing can lower the rate, extend the term, release equity for business use, or move from a low-doc to a full-doc structure now that financials support it.
Lenders active in this space
Pepper Money, Macquarie, Metro Finance, Westpac — among others on our panel of 18+. Your broker checks fit before anything is submitted.
Key terms
Business debt refinance
A business debt refinance is a new facility that pays out one or more existing loans, changing the rate, term, structure or lender, and assessed on whether the total cost improves rather than the repayment alone.
Payout figure
A payout figure is the amount required to close an existing facility on a given date, including any remaining balance, break costs and fees, and it is frequently higher than the balance shown on a statement.