If you think your bank/lender is giving you a hard ride with your current existing rates, you should consider choosing to refinance your business loan.
Fortunately, you’re in the right place. Here, we’ll break down everything you need to know about refinancing a business loan and why it always helps to seek a reliable mortgage broker.
In simple terms, refinancing your business loan means applying for a fresh mortgage loan all over again. Most of the time, it means paying off an existing loan with a new one.
You can also choose to merge your current debts at a lower cost by refinancing your business loan.
Since business loans are outside the scope and regulations set by the National Consumer Credit Protection (NCCP) act, banks and lenders are typically more lenient and flexible with their rates and policies.
Nevertheless, convincing the bank that you’re a trustworthy client and a low-risk borrower is just as crucial. That said, you need to provide adequate proof and documentation of your business’s sales history and financial standing.
You don’t need to worry as much if your business has a relatively strong foundation and grip on the market. The following are some of the required proof most banks and lenders would ask from you:
We recommend reading through the following list of things to consider so you can better decide whether you need to refinance your business loan or not:
Before going out of your way to finding a business loan refinancing deal, here are five steps you need to know in applying for a new loan:
You can always choose to refinance your business loan. However, take the time to think about whether you need to refinance or not. It may not be an excellent decision, especially if you’re paying off a fixed loan rate.
Besides, if you haven’t read the exit policy of your existing loan, you may end up paying expensive exit fees on your business loan.
If you have time, consider shopping through different lenders and mortgage deals to choose the best lender with the features and rates you need.
Otherwise, our mortgage brokers at Plan A Mortgage can streamline the process for you so you can save a lot of your precious time and focus on growing your business.
Once you’ve decided on a bank and loan deal, it’s time to prepare all the required paperwork and apply for the loan. We recommend giving your current lender a heads-up so your new bank or lender can acquire your information faster.
Once the bank finishes evaluating your loan application and information, you’ll eventually get formal approval if the lender chooses to accept your loan application. After that, you’ll be well on your way to refinancing your business loan.
After getting formal approval, your new business loan will now begin paying off the old one. Most of the time, you have a month to settle the old loan and start your repayments for the new business loan.
For your business loan refinancing, we have specialist mortgage brokers to help you shop and find the best lender and rates and get your loan approved in no time.
We’ll be happy to discuss your business loan needs with you. Call us at 1300 052 055 today.
Despite the risks associated with paying off a business loan with another one, there are still a handful of benefits a business can reap from refinancing an existing loan, such as:
If you think you’re paying more on your current loan, it’s not a bad idea to refinance your loan with a better deal that will save you more in the long run.
You can merge five debt facilities into one business loan and only have to meet one monthly payment. By doing so, you don’t have to deal with several monthly payments from different banks.
By refinancing your business loan, you can take off the liability from your equity. That means you can use your business equity as another working capital or use it for investments.
Having a business loan long enough will give you access to new features, especially when you refinance your loan. These features, including extra repayments and opening an offset account, can help you repay the loan faster in the long term.
You can enjoy depreciation benefits and leverage negative gearing by refinancing your existing business loan. However, we always recommend speaking with a taxation professional before proceeding to refinance your loan.
Considering all factors before refinancing your business loan is crucial to prevent any regrets along the way.
If you already understand how refinancing affects your brand and your funding in the long run, then we suggest going for it. Here are some of the considerations you need to weigh before refinancing:
Whether you refinance your business loan or not will depend on your ultimate goals for your business. You can always refinance if you’re looking for better interest rates, access to more loan features, or switch to another loan.
Refinancing on a fixed rate could lead to an expensive exit fee when you want to switch lenders. However, if your business loan is on a variable rate, we recommend refinancing your business loan every two to three years only if you think you’re better off afterwards.
Refinancing a business loan involves a few associated fees, including the exit fee, valuation fee, and settlement fee.
It doesn’t hurt to shop around and look for the ideal lender for your desired loan product. Not all banks and lenders can offer you the deal and rate that you need. That’s why having a mortgage broker as your partner can help you find the right bank/lender for your business.
Every time you apply for a business loan refinancing, you’re adding an enquiry to your credit file. Over time, enquiries stack up if you don’t get formal approval. As a result, this could harm your credit score, and you might have trouble getting approval for different financing products.
We recommend discussing with a tax professional or financial advisor before heading out to refinance your current business loan.
Refinancing a business loan might be a bad idea if you have trouble repaying your existing loan. We suggest that you discuss your current situation with us, so you’ll know if refinancing will put you in a better position or end up drowning in more debt.
Plan A Mortgage has a team of professional business mortgage brokers with long-running experience in business loan applications.
We will help you find the perfect bank or lender to refinance your business loan. More than that, our mortgage brokers will assist you in sorting out your business finances.
Call our professional staff at 1300 052 055 to know why we’re the best team in business loans.