Business debt consolidation loan · Refinancing business debt
Business debt consolidation loan for Refinancing business debt
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.
How a business debt consolidation loan works 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. Two conditions apply: the underlying trading has to support the new repayment, and you have to be willing to accept that a longer term can mean more total interest even at a lower rate. We show both figures before you decide.
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
Business debt consolidation loan for Refinancing business debt: the numbers
| Typical amounts | $20,000 – $1,000,000 |
|---|---|
| Term | 12–60 months |
| Indicative rates | 8.5% – 26% p.a. |
| Repayments | Weekly or monthly |
| Speed | 2–10 business days depending on security |
| Documents refinancing business debt usually need | 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 |
Rates are indicative, change without notice and depend on the lender, product, asset, term and your credit profile at the time of application. They are not an offer of finance. Comparison rates, where shown, are true only for the example given.
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.
What is a business debt consolidation loan?
A business debt consolidation loan is finance that pays out multiple existing business debts and replaces them with one loan at one rate on one repayment schedule. The aim is a lower and more predictable regular outgoing.
Does consolidating business debt cost more overall?
Usually yes. Spreading the same principal over a longer term reduces each repayment but increases total interest paid. The trade-off is worthwhile when the improved cash flow lets the business trade profitably again.
What is debt stacking?
Debt stacking is holding several short-term business loans or cash advances at once, each with its own daily or weekly debit. It compounds cash-flow pressure and narrows the pool of lenders willing to consider new applications.
Questions from refinancing business debt
When is refinancing business debt worth it?
When a lower rate, a longer term or consolidating several facilities reduces the total cost or the monthly repayment enough to outweigh exit fees and set-up costs. Facilities taken when the business was smaller or its credit weaker are the most common candidates. A broker runs the numbers including early payout costs before recommending a switch.
Can I refinance ATO debt into a business loan?
Yes. Some lenders refinance tax debt into a term loan secured against equipment or property, which protects a payment arrangement and frees cash flow, while others exclude ATO debt altogether. Lender choice matters and a broker knows which will accept it.
Can I refinance equipment loans to lower the repayment?
Yes. Equipment and vehicle loans can be refinanced onto a longer term, a lower rate or with a balloon added, and unencumbered assets can be used to raise cash through a sale and leaseback. Lenders assess the equipment’s value and age and the remaining term.
Can I release equity from my premises when refinancing?
Yes. Refinancing a commercial property loan at a higher value or lower loan-to-value ratio can release equity for working capital, expansion or debt consolidation, typically up to 70 to 80 per cent of the property’s value. Lyft Financial handles commercial property refinancing.