Refinancing your business loans

What is refinancing?

To refinance means to adjust or change existing loans. You replace a loan you have with another loan.

Ways of refinancing

You can use refinancing in different situations.

Refinance an existing loan

When refinancing, you usually want to transfer an existing loan. You pay off an existing loan with a new loan. This may be attractive because of better terms and interest rates, or new investments you want to make. It may also be because the existing loan or interest period expired. When switching at the end of the fixed-interest period, you do not pay a fee for early repayment (penalty interest). You can also take out a new loan because the term has expired but an amount is still outstanding.

Merging loans

Refinancing is also possible if you have loans with different lenders. You then pay off all existing loans with 1 new loan. You then only have 1 amount to pay each month. And you go from having different maturity dates to a single moment when the loan is repaid.

Of course, the other way round is also possible. You go from 1 loan to several loans, possibly from different lenders with different maturities. This is less straightforward, but can be a solution when your financing needs differ in terms of amount and maturity.

Adjusting the amount

Finally, refinancing can mean financing a different amount. An example is higher financing on a commercial property or because the new lender wants to finance a higher percentage of the property's value. You must then have a purpose for the extra financing. That is, you know what you will use the amount for.

Note that you can also face the opposite situation. If the value of the collateral (for example, your business premises) drops, it may become more difficult to get refinancing with favourable conditions.

Points to consider when refinancing

You can usually refinance at any time. So, at the end of the term, at the end of the interest rate grace period, or in between. Bear in mind that refinancing may incur additional costs. For example, closing costs, an early repayment fee, and an administration fee. These extra costs may cause financial problems. So, be sure to carefully consider refinancing at the right time.

When refinancing, pay attention to the interest rate you must pay and to the other conditions. What happens to the collateral you have put in? Can you offer this to a new lender? Also pay attention to whether the interest rate is fixed or variable. If you choose to switch from a fixed rate to a variable rate, you run the risk that your interest rate will rise in the future, increasing your monthly charges.

Finding suitable refinancing may take some time. Also consider a lead time with the financier and start the process on time. 

Arranging refinancing

You can get refinancing from several lenders. Check the overview or use the Choosing Financing Tool to select a suitable financing form. For refinancing, you must apply to the financier of your choice. Check what information you need to provide.

Help with business financing

The Financing Guide will help you find your way around financing options. Do you still have questions? Call the helpline on 088 585 11 11 or ask an expert for advice .