Why Now May be the Best Time to Refinance

In these uncertain times that we are currently experiencing, of furloughs, lockdowns and COVID-19, we have seen extra pressure on business finances.  

Having spoken to several clients, it’s our view that this may be a good opportunity to review your current financial arrangements, such as your existing business loans.

Please click here to find out more about refinancing with Samera.

Why Would You Want to Refinance Your Existing Loan Facility?

Why would you want to refinance your existing business loan? You may find that you can now achieve a better rate or term than you originally received on your existing facility.

Many lenders base their lending criteria on the length of time your business has been operational and the business profits. As your business matures and becomes more profitable, you will likely be eligible for better interest rates and terms.

By reducing the interest rate or changing the length of your repayment term via refinancing, this could help free up working capital for your business, as well as save you money over the term of your loan.

Review Your Costs

Review your costs and see if any of your financial obligations can be extended to ease the pressure today.

Look at the assets you may have bought in the last six months. Did you buy these from your cash flow? If so, they could be financed over a longer period, reducing your monthly outgoings.

Asset purchase covers a multitude of items. From cars to equipment, many of these items can be financed over 5 – 7 years if they were purchased recently.

So, go through your recent asset purchases and figure out which of them can be refinanced to ease your current expenses.

How do you Refinance Your Existing Business Loan?

This is the area where we can help!  We have a panel of lenders that would be able to assist you with refinancing your existing business loans. 

By refinancing to the correct lender, you can achieve your goal of reducing the overall loan payments that you are currently making on your business facility. 

What information will the lenders need to take forward your application: 

Personal Profile Forms

This gives lenders an understanding of an individual’s financial background, it sets out what current liabilities they have and breaks down personal assets. 

Personal & Business bank statements

These help to verify your personal & business monthly income and expenditure. A good bank account conduct is a huge positive for lenders when assessing any application. 

Three years of financial accounts

These are used to demonstrate the business profitability, the bank must verify that the lending will be serviceable. Displaying a strong financial performance by the business over a period helps assist with a positive lending decision.  

Existing loan details

Such as; reason for the original loan, existing balance, monthly payment, Interest rate, remaining term, and early prepayment penalties (if any).

You may also be interested in consolidating multiple business loans and refinancing them into one facility, this would allow you to benefit from better terms on all your business lending.

Some clients have purchased business assets from their working capital instead of using finance. This can put pressure on a business’s cash flow.  You could, instead, explore this area and re-finance recently purchased assets onto a finance agreement, meaning that the items can be funded over a longer term. 

Now is the Time to Refinance

Review your main costs now and look at your loan payments for the purchase of your business and/or property.

This is the time to review those costs.

• Is the interest rate too high?
• Can it be renegotiated?
• Could the repayment period be extended?
• Could you ask for a period of interest-only?

Doing any of these will reduce your monthly costs during the current challenges.

Up-to-date accounts and management information are crucial when you are looking to help your cashflow, as lenders will need to see the present position and understand how your trading will look in the future.

Click here to read our blog on How to finance a healthcare business.