If your business is carrying existing debt, you might be wondering whether refinancing could help improve your financial position. Many Windaroo business owners find themselves paying higher than necessary interest rates on loans they took out when their business was in a different financial position.
Refinancing your existing business debt involves replacing your current loan with a new one, typically with more favourable terms. This could mean a lower interest rate, different loan structure, or more flexible repayment options that align with your current business needs.
Why consider refinancing your business debt?
There are several compelling reasons why business owners in Windaroo choose to refinance their existing debt:
• Lower interest rates: Market conditions change, and you may now qualify for a lower interest rate than when you originally applied
• Improved cash flow: Restructuring your loan can reduce monthly repayments, freeing up working capital
• Access to additional funds: You might be able to increase your loan amount to purchase equipment or cover unexpected expenses
• Consolidate multiple debts: Combine several loans into one manageable payment
• Change loan terms: Switch between fixed interest rate and variable interest rate options based on your preferences
Types of business loan structures available
When refinancing, you'll have access to various loan structures depending on your business needs:
Secured Business Loan: Uses collateral such as property or equipment to secure the loan, often resulting in lower interest rates.
Unsecured Business Loan: Doesn't require collateral but may have higher interest rates due to increased lender risk.
Revolving line of credit: Provides ongoing access to funds up to an approved limit, with the flexibility to draw down and repay as needed.
Progressive drawdown: Allows you to access funds in stages, which can be particularly useful if you're planning to purchase a property or buying a business over time.
Ready to get started?
Book a chat with a Financial Planner & Mortgage Specialist at MWT Financial Solutions today.
The refinancing application process
When you're ready to explore refinancing options, the application process typically involves:
- Assessment of current debt: Review your existing loans, interest rates, and repayment terms
- Financial health check: Evaluate your current cash flow, business performance, and financial statements
- Research options: Access business loan options from banks and lenders across Australia to find suitable alternatives
- Documentation: Gather required financial documents and business information
- Application submission: Complete the formal application process with your chosen lender
Most lenders will want to see evidence of your business's ability to service the new loan, including recent financial statements, tax returns, and cash flow projections.
Flexible features to consider
Modern business loans often come with features that can make managing your debt more convenient:
• Redraw facilities: Access to additional repayments you've made above the minimum requirement
• Flexible repayment options: Choose between weekly, fortnightly, or monthly repayments
• Interest-only periods: Temporary reduction in repayments during slower business periods
• Multiple drawdown options: Access funds as needed rather than taking the full loan amount upfront
When refinancing makes sense
Refinancing isn't always the right choice for every business. Consider refinancing when:
• Your business credit profile has improved since taking out the original loan
• Market interest rates have decreased significantly
• You need additional working capital for growth opportunities
• You want to purchase equipment or expand your operations
• Your current loan terms no longer suit your business model
• You're looking to consolidate multiple debts into one payment
Working with a finance broker
Rather than approaching individual lenders directly, many Windaroo business owners work with finance brokers who can access business loan options from multiple banks and lenders across Australia. This approach can save time and help you compare different loan amounts, interest rates, and loan structures from various providers.
A broker can also help you understand the implications of different collateral requirements and assist with the application process to present your business in the most favourable light to potential lenders.
If you're considering refinancing your existing business debt, it's worth exploring your options. The right refinancing solution could improve your cash flow, reduce your interest rate, and position your business for future growth. Our team at MWT Financial Solutions specialises in helping Windaroo businesses find suitable financing solutions.
Call one of our team or book an appointment at a time that works for you to discuss your refinancing options.
