Business Refinancing – Is It Right For Your Business?

Although Merchant Capital does not offer business refinancing, this page is a great informational resource. Refinancing can save you and your business money on your monthly payments, get you a lower interest rate, or even change the terms of your loan. Read on to evaluate whether business refinancing is the right choice for you.

Dov Girnun


CEO, Merchant Capital

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What is the purpose of refinancing a business?

When you refinance your business loan, you're essentially taking out a new loan to pay off your existing loan. This new loan will have different terms than your original loan, which could include a lower interest rate, a different repayment schedule, or a different loan amount.

Before deciding to refinance, it's important to understand how it will affect your business and whether or not it is the right move for you. Here we will explore the key factors to consider before refinancing your business.

Is it worth it to refinance a business?

There are many reasons why business owners choose to refinance their loans. Maybe you're looking to save money on your monthly payments, or you want to take advantage of a lower interest rate. Perhaps you're looking to change the terms of your loan, such as the loan amount or repayment schedule. These are all very viable financial decisions to make, and so as you consider the refinance route, here are some benefits and risks to understand before you apply.

The benefits and risks of business refinancing

The first step is to evaluate your current financial situation and determine if refinancing makes sense for your business. There are both benefits and risks associated with business refinancing, so it's important to do your research and make sure it is the right decision for you

The benefits of business refinancing

  • Reduced interest rates: One of the main reasons business owners choose to refinance is to secure a lower interest rate on their loan. This can save you money in the long run and free up cash flow that can be reinvested back into your business.
  • Increased borrowing power: If your business has grown since you first took out your loan, you may be able to refinance for a higher loan amount and access additional capital. This can be used for business expansion, hiring new staff, or other growth initiatives.
  • Consolidated debt: You may also choose to refinance multiple business debts into one single loan. This can simplify your monthly payments and make it easier to manage your overall debt load.

The risks of business refinancing

  • Extended loan terms: While a lower interest rate can save you money in the long run, extending the term of your loan will increase the cost of capital you pay over time. Make sure to consider the trade-off between a lower interest rate and a longer repayment timeline before you refinance.
  • Personal guarantees: If you are refinancing with a new lender, they may require personal guarantees from the business owners. This means that you would be personally liable for repaying the loan if your business is unable to do so.
  • Impact on business credit: Taking on new debt can impact your business credit score, which could affect your ability to secure financing in the future. If you are considering business refinancing, make sure you understand the potential impact on your business credit score.


Business refinancing can be a great way to secure a lower interest rate, consolidate multiple debts, or access additional capital for business growth. However, it's important to understand the risks and implications before deciding to refinance. Consider your current financial situation and compare the costs and benefits of business refinancing before making a final decision.

At Merchant Capital, we make it our business to understand yours, and because we do, we can help you realise your business ambitions. 

Contact us today for our award-winning funding solutions and flexible repayment options

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