Most businesses, at some point, take out loans to secure working capital, purchase equipment, expand their business, seize opportunities, and facilitate growth. But sometimes it can be advantageous to refinance a business loan.
Why Refinance a Business Loan
Business owners may want to refinance a business loan to get a better business loan that may have a longer repayment period, lower monthly payments, or a lower interest rate. Refinancing can include consolidating debt which can also result in lower total monthly payments, a lower interest rate, and improved debt management. Plus, lower monthly payments can free up cash flow for other purposes.
Things to Know Before Refinancing a Business Loan
First, it is critical to know what you want to accomplish before refinancing a business loan. Knowing what you want to accomplish will help you identify the right loan and the right lender.
Second, you should know the terms of your current loan (or loans) including the interest rate, how much principal and interest remain on the loan, and any early payment penalties. Make sure your current loan(s) allow refinancing. Knowing these things will help you identify a better loan.
Third, know that your business’s financial condition matters with a lender. Key factors include current revenue, cash flow, time in business, and your current credit score.
Fourth, know that the types of loans that can be refinanced include term loans, working capital loans, equipment loans, microloans, and commercial real estate loans.
Fourth, be selective in reviewing offers to refinance because some refinancing offers may not be worth the time and effort. Know the cost to refinance and the rate and loan terms that you can qualify for.
Business Loan Refinancing Options
Refinancing options can include a bank loan, SBA refinancing, loans from alternative lenders, term loans from private lenders, equipment loans, and microloans.
Seek Expert Financing Assistance
Contact Lode Capital for financing made easy. We offer a wide variety of customized financing options that are critical to your success.