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A Guide to Refinancing Your Business Loan

As we covered in our recent guide to refinancing your home loan, changing circumstances should prompt a review of your loans with a view to getting the best deal you can – and your business loan is no different. Business owners can attest to the importance of maximising cash flow, reducing overheads and boosting the bottom line – so it stands to reason that your loans should facilitate these goals. The current state of the finance market and the attractive options on offer means that now really is the best time to explore your options, especially as the low interest rates currently on offer will not stick around forever (especially as a rate rise is expected in the middle of 2022). So, what can your business gain from refinancing, what options are out there, and how do you get it done? Read on to find out.

Refinancing Your Business Loan – Potential Benefits

Getting a better deal on your business finance makes sense – lower your repayments, pay off your loan sooner, or unlock equity. But the underlying reason to hit those marks is to grow your business. Imagine what your business could achieve if you cut costs. Where cash is king, increasing your cash flow through a lower lending rate or extending your loan term can give you the freedom to re-invest that money back into your business. This could be purchasing new equipment, upgrading facilities, taking your hard-working staff on a team building day, or even making additional repayments.

Accessing available equity through refinancing may also allow your business to leverage supplementary top-up loans. Much like homeowners can use it to take on an additional loan to renovate their home or make a large purchase, so too can business owners use top-up loans to invest in their business if their lender makes such facilities available to them.

Refinancing Your Business Loan – Your Options

Owing to the ultra-competitive loan market at this point in time, there are plenty of options out there if you’re refinancing your business loan. Not only are interest rates at historic lows, but many lenders are also willing to go the extra mile to win new business. For instance, one major lender has established a “rapid refinance process” which does away with lengthy and cumbersome application requirements, streamlining it into a faster process with two documents, with terms up to 25 or even 30 years. Making the refinancing process more efficient and attractive for businesses means that loans can be approved faster, businesses get their new (better) loans settled sooner, and oftentimes the bank is bringing in a new customer.

Refinancing your business loan may also open up options for additional features not available on your current loan. This could include overdraft facilities, combining fixed and variable rates, flexible payment options and much more.

Refinancing Your Business Loan – The Process

The wide range of options available to business owners when refinancing their loans is great for knowing that there will likely be one that suits your needs, but can make it hard to decide. This is where partnering with a broker is important. Brokers have access to a broad range of lenders, and use their experience and up-to-date industry knowledge to secure you the best deal. This looks beyond just the interest rate – a broker will take into account the term of the loan, fixed vs variable rates, other additional product features and the lending appetite of particular lenders at that time.

For most business loan applications, you’ll need to provide certain documentation before anything proceeds. This often includes identification, business registration documents, financial statements, Business Activity Statements (BAS) and projected financial information. Another benefit of engaging a broker to help you when refinancing your business loan is their knowledge of exactly what you will need to provide, saving the hassle of going back and forth with a bank. In most cases, this leads to a smoother application process and a faster turnaround overall – meaning your business can reap the benefits of a new or improved loan facility.

Next Steps

If you have a business plan in place, and you’re ready to take the next steps towards growth, the final piece of the puzzle may be finance. If this sounds like you, or if you just want to see what options are out there for refinancing your business loan, get in touch with the Finance team at McKinley Plowman today on 08 9301 2200, or via our website and speak with one of our brokers.

written by:

Paul Moran

Paul has over 35 years of experience in finding financial solutions for homebuyers, investors and business owners.
A licensed broker and member of the Mortgage & Finance Association of Australia (MFAA), Paul’s extensive experience includes 20 years with a major bank, seven of which were as commercial banking manager.
Paul delivers a holistic financial solutions to achieve the best possible outcome for a client’s personal or commercial lending needs. Paul also provides a comprehensive financial consultancy to business owners on commercial, equipment and invoice finance.