How to Refinance Your Small Business Debt

With constant chatter about the economy, it can be hard to know the right decisions to make for your business. That’s why we’re telling our clients that now is the time to refinance your small business debt. We’ve studied the market conditions and found the best deals. Ready to consider a refi for your company? Watch the Maven Minute here, or read more below.

What Is Refinancing?

Refinancing is a strategic decision to change the terms of a credit agreement. For example, you may take out a loan to pay for a car, a mortgage, or in this case, small business expenses. When you sign off on the loan, you agree to a set interest rate and payment schedule. But those terms can be changed—and ideally improved—by refinancing.

There are several reasons a borrower may consider or even need to refinance business debts. Typically we recommend refinancing debt when clients have several loans that could be consolidated into one new loan, or if the terms of their existing debt aren’t favorable. Some borrowers need additional cash flow relief for the business which refi-ing debt could be a significant source of additional cash for the business. You may be able to get a lower interest rate or change the loan’s duration. You will either approach your current lender or a new one to apply for refinancing. They’ll take a look at your credit and finances to decide the new terms of your loan.

The main thing to remember here is that financial debt doesn’t and shouldn’t be a burden, but can, in fact, be a tool to grow your business. As a rule of thumb with new loans, we suggest keeping three to six months’ worth of working capital, go for smaller payments over a longer term, and work with a lender that helps accommodate a reasonable and affordable down payment that makes sense for your business. The same ideals apply to refinancing.

Should I Refinance My Small Business Debt?

Interest rates are still on the lower end but notable increases have changed the landscape as we continue into the second quarter of the year, and we anticipate rates to continue to rise into 2023. With additional federal increases planned throughout the year, many lenders are already preemptively raising rates and reevaluating as frequently as daily. Many companies are taking their cue to refinance small business debt before rates go up again.

Does it look like your company could benefit from new loan terms in the current market? Here’s how you can make it happen.

 How Do I Refinance?

There are several ways you can approach refinancing.

  1. Talk to your bank. They might be interested in consolidating all your debt and extending and improving the terms.
  2. Shop for a different bank. We find that local, smaller banks can be competitive, while larger banks often run specials that can be appealing.
  3. Ask an advisor like Maven Financial Group. We help dental practices, aesthetics companies, and small businesses like yours find the best refi deal with an exclusive list of lender partners we work with and trust. Let us help you identify your lending opportunities with a complimentary financial assessment today!


Contact us today for a free financial analysis and refinancing advice.