Refinancing a business loan or a business loan can occur if you want to change the conditions of a loan. This can be the case, among other things, for the desire to pay a lower interest rate. For example, you could have had an expensive loan in a period when things went less well with the company or you have had growth through factoring (often a more expensive company credit) and now it's going better and you want it cheaper too.
In addition, you would want a change in the term of the loan. By extending the term of the business loan you have to pay less per year and more cash is needed for other things.
It is also possible that you have borrowed money from your family which you now want to replace with a company credit from a financier. p>
In addition, it is also possible that you want to have a change in the collateral attached to the loan. So it may be that you no longer want to be a private guarantor for the loan.
When refinancing the Business long-term loan, you have to take into account the fact that there are financiers where you have to pay a fine if you prematurely end the long-term business loan. This penalty should usually only be paid if the interest on the existing loan is higher than the market rate at that time. In other words, the interest that you can get from others at that moment. It is therefore always wise to first calculate whether it is interesting to change the financier when refinancing.
It may also occur that refinancing of the existing financing is necessary in order to obtain a new extra financing. This can occur if the existing financier does not want to pay an extra business loan or business loan and another financier wants to provide this business financing but needs all the security and therefore also wants the securities that are pledged to the other financier. Taking over the business financier of the other financier is often the only option.