Why, when and how to refinance your business loans


Whether you’re looking to reduce your business loan repayments, access more favourable terms, improve cash flow or start using a completely different funding option altogether, refinancing could bring your business countless benefits.

In this guide we explore; what refinancing means, when it is a good idea, why it can be beneficial and how to refinance.



If you’d like to explore how refinancing could benefit your business or compare your existing facilities against the wider market, we can help. Contact us today on 0800 9774833 or request a call back to see if you could access a funding facility better suited to your needs.


What is refinancing?


Refinancing funding, such as a business loan, typically enables the borrower to replace their existing facility with a finance solution that has more favourable terms or better supports their business.

Through this process, the borrower secures a new finance facility to pay off their existing arrangement, ending the terms of the old loan and starting a new agreement.

What are the benefits of refinancing?

It’s always important for businesses to regularly benchmark and review their funding to ensure they continue to benefit from the most suitable and cost-effective funding available for their evolving needs.

Refinancing could allow you to access lower monthly payments, adjust the term length, reduce the overall cost of borrowing or benefit from a more convenient payment structure.

But refinancing your existing funding facility to find a solution that better serves your requirements could bring your business even more benefits than just cost savings.

1. Improved service

Not all funders offer the same service levels. By optimising your funding facility you could find a funding partner that is better aligned to support your  requirements, whether that’s a more hands-on service or a funder who has specialist knowledge of the intricacies of your sector.

2. Better systems

Different funders use different systems and technologies. A new funding provider could therefore allow you to utilise more advanced systems, which could speed up and streamline processes to give you back valuable time to concentrate on your business.

3. Better cash flow

Having an external funding facility in place doesn’t guarantee a healthy cash flow. And even if your existing funding provides adequate access to cash, could you benefit from a facility that smooths out any peaks and troughs in cash flow?. By refinancing, you could find a facility that generates more working capital, in line with your sales.

4. Increased flexibility

Some funding facilities, like loans and overdrafts, are naturally rigid. For growing businesses or those with seasonal trading patterns, this can be restrictive and hugely frustrating. Refinancing to a more flexible option will allow you to easily adapt to changes in your business and fluctuating demand.

5. Additional services

While some funding facilities simply boost cash flow, others come with additional services which can be beneficial. For example, some facilities, such as invoice finance, can incorporate additional services and benefits such as credit management or debtor protection for added peace of mind.

6. Stay ahead of the competition

Refinancing could put you in a better position to invest in your business’s growth, keeping you ahead of the competition and ensuring your long-term success.

7. Keep up with the times


The funding market is constantly evolving. With new funders starting up, existing ones diversifying into new products and even well-established products evolving to cater for new requirements, it may be that the funding which was once best for your business may no longer be so.

Discover 7 real examples of how successful businesses have benefitted from optimising their funding facility

Are there any disadvantages to refinancing?


Fortunately, if you do your research and ensure that the new finance facility is preferable to your existing one and that you are eligible, you will avoid many of these disadvantages and will benefit from the support of a better deal.

How to refinance a business loan

1. Review your existing facility

Examine the specifications of your current agreement to see how much you’re paying and check if there is an early termination fee. It’s important to consider that the value of refinancing could potentially outweigh any fees or charges, and the new funding could enable you to increase your revenue by providing you with the funds to maximise new business opportunities

2. Outline what you want to achieve from the process

Knowing what you’re hoping to achieve from this process is key to finding the most suitable facility for your needs. Do you want to improve cash flow? Do you want a funder who understands your business? Or do you want additional services incorporated into the facility?

3. Compare your options

Once you know the value of your current loan and your aims for this process you can shop around to find a more suitable solution.

When doing this remember that the cheapest funding option isn’t necessarily the best for your business.

Instead, it’s more important to consider if the cost of the facility is proportionate to the service provided and the opportunities it enables your business to access.

A commercial finance broker can help you through this process ensuring you find the most suitable option for your needs.

4. Apply


Once you have identified a facility that better suits your business and have checked your eligibility, you can apply for it. Then you can use the new funding facility to pay off the remaining balance on your old loan.


The importance of a broker in this process


With various options available, and lenders often using confusing terminology and different pricing structures, it can be challenging and time-consuming to compare facilities. Using a broker can make it easier to understand the market and find the optimal solution.

They will take the time to fully understand your business, funding needs and challenges to match your requirements with the products and finance providers that will best support your business, saving you time in the process.

Plus, once your funding is secured, a good commercial finance broker will continue to support your business by helping you as you get to grips with the new facility  and making sure that your funding continues to work in the long term.

To discuss refinancing with one of our expert funding consultants, request a call back.

Should I refinance?

Ultimately this will depend on whether or not there are more suitable options available to your business and should always be assessed on a case-by-case basis. But, if any of the following statements ring true you might want to consider looking for a more suitable solution:


For more on this please read: 6 signs your funding is failing you  

Is refinancing the only option?


If your current facility is causing financial hardship or failing to provide the support you require, but it’s uneconomical to refinance at this time or there isn’t a better option available, don’t worry.

In many cases, an additional funding facility can provide vital support. For instance, in providing the cash to meet loan repayments or additional headroom to overcome any short-term cash flow challenges.

So, even where refinancing may not be suitable, it’s always worth exploring other options that may be available to your business.

Key takeaways to remember


Do you want to refinance an existing loan?


If you’d like to explore how refinancing could benefit your business or compare your existing facilities against the wider market, we can help.

Contact us today on 0800 9774833 or request a call back to see if you could access a funding facility better suited to your needs.

How we can help:


Some of the funders we work with

  • Peak Cashflow
  • Partnership Invoice Finance
  • Aldermore Invoice Finance
  • Pulse Cashflow Finance
  • Barclays
  • Roma Finance
  • Accelerated Payments
  • Woodsford Tradebridge
  • Clear Factor
  • Time Finance
  • Ultimate Finance Group
  • PNC Business Credit
  • Metro Bank SME Finance
  • 4Syte
  • Regency Factors
  • Praetura Invoice Finance
  • Team Factors
  • Sonovate
  • Leumi ABL
  • Blazehill Capital
  • Close Brothers Invoice Finance
  • Castlebridge
  • Berkeley Trade Finance Ltd
  • Kriya
  • Santander Corporate & Commercial
  • InvoCap
  • Tradeplus24
  • IGF Invoice Finance
  • Cynergy Business Finance
  • MaxCap
  • Merchant Money
  • Giant
  • Investec
  • Davenham Trade Finance
  • Davenham Asset Finance
  • Lloyds Bank Commercial Finance
  • eCapital Commercial Finance
  • Nationwide Finance
  • Haydock Finance Ltd
  • Royal Bank of Scotland
  • ABN AMRO Commercial Finance
  • Skipton Business Finance
  • Optimum Finance

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We are a credit broker and not a lender and offer credit facilities from a panel of lenders