How does refinancing business loan work?

Refinancing a business loan starts with reviewing your existing loan agreement.

• You need to analyse your interest rate, outstanding loan balance, repayment schedule, and any fees for an early repayment penalty. Comparing these terms to those on offer in the market will help you assess whether to proceed or not.
• If you can find a lender who is offering better terms, you can apply for the refinancing. Generally the process involves doing a review of your updated financial statements and providing a business performance report, in addition to the other documents that the new lender may require.
• When you have successfully applied for refinancing and your final approval has been received, the new lender will pay off your old loan in full on your behalf, and you will start paying the new loan in accordance with its new terms.

Refinancing can also incur costs. You may incur processing costs, legal costs, or lastly, early repayment penalties to close your preceding loan.