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How to Refinance Business Loans
As your business evolves, it’s important that the structure of your borrowing does too. Too often, growing enterprises don’t take the time to review debt obligations that had been part of their cash flow since the early days. Facilities taken at startup or during periods of rapid growth may no longer fit your business scale, or its developing plans.
Refinancing is a powerful way to improve efficiency, reduce the long-term cost of debt-based capital, and release cash to fund new opportunities.
With technologies improving constantly, new avenues have arrived in recent years to create a wide, diverse lending landscape. From traditional banks to specialist lenders, opportunities exist to give your business the financial power it needs. Strategic refinancing is especially important in a higher interest environment, where every improvement on rate can result in significant savings.
Clifton Private Finance can work with you not just to save money, but to optimise your structure and improve flexibility for growth.
Why Refinance Your Loan Structure
For an agile, modern business, refinancing is best considered as part of regular financial housekeeping, not just something to reach for when cash flow pressure looms. During periods of strong financial standing, you are in the best position to gain, with superior rates and flexible deals. Of course, restructuring your debt architecture is equally important during times of stress - Clifton Private Finance are here to help with the essential expertise that delivers an optimised business loan structure to meet your essential deadlines.
- Reducing the cost of borrowing - As you grow, your business financial profile and credit record improve, often putting you in the position to secure better interest rates or greater flexibility with fees. Lower rates lead instantly to smoother cash flow and long-term savings.
- Simplify debt administration - Managing multiple smaller loan structures - such as overdrafts, credit cards, and asset finance - into a single overarching secured loan reduces the accounting load, leading to fewer stress points on cash flow and easier management.
- Improve cash flow - Spreading repayment over longer terms will shrink your monthly obligations, giving your business greater agility, both in seizing opportunities for growth and managing unforeseen events.
- Meeting current business strategies - A well-designed debt finance solution considers your wider business strategies, aligning funding checkpoints and repayment levels to best facilitate both short-term and long-term plans.
- Preparation for future funding - Refinancing plays its part in developing your business’s financial standing, ensuring you are in the perfect position for any major funding needs in the years to come.
Opportunities for Business Loan Refinancing
Partnering with Clifton Private Finance gives you the power to restructure a wide range of debt finance. Our holistic approach means your financial position will be considered from a wider perspective. With expert attention, our advisors will evaluate each and every debt obligation you currently carry, looking for opportunities to reduce costs and administration.
We are able to refinance:
- Unsecured finance - Often, unsecured loans are at a higher rate, taken early in your business or project lifecycle. Refinancing these business loans can result in immediate and considerable savings.
- Secured business loans - Reassessing assets and consolidating multiple existing loans improves administrative and financial overheads.
- Commercial mortgages - Our specialist mortgage team can refinance existing commercial property loans to improve flexibility, reduce rate, and release equity.
- Bridging finance - Meeting planned exit goals is key to keeping the costs of bridging finance down. With specialist understanding, we work to put in place the necessary exit finance that shortens bridging deals and minimises interest.
- Development finance - Replacing short-term, high-cost facilities with low-impact mortgage deals is essential as soon as the project meets long-term lending criteria.
- Asset finance - Restructuring existing asset finance improves cash flow and releases capital for vehicles, machinery, and equipment where you have built equity over time.
- Invoice finance - Redeveloping your working capital products will improve flexibility and lower overall costs.
By exploring multiple debt structures together, CPF can develop a comprehensive plan for immediate savings, releasing pressure and ensuring long-term stability.
How Business Refinancing Works
A full evaluation and overview of your existing debt combined with our in-depth knowledge of the UK lending marketplace, and bespoke research regarding your individual needs, will lead to a superior refinancing strategy that boosts your business.
Full Business Financial Review
Our team:
- Audit your existing debt facilities, gathering data on essential variables, such as loan amounts, current terms, and rates. We consider your contractual obligations to understand the true cost of your current commitments.
- Discuss your business objectives, making sure to understand your goals, both immediate and long-term.
- Review your assets, both tangible and intangible, to gain an insight into your available security and leverage options.
Structure Development
We:
- Determine the most suitable lending structure moving forward, exploring avenues for asset-based secured lending, property-backed short and long-term options, and unsecured facilities.
- Evaluate your cash flow stresses and long-term goals to match potential solutions.
- Explore both single consolidation (one loan to replace multiple existing debts) and staged restructuring options.
Determining Lender Suitability
With access to, and established relationships with the full marketplace of corporate lenders, our team:
- Approach multiple lenders.
- Compare terms, fees, flexibility and appropriateness of lender products.
- Evaluate lender requirements for securities and potential needs for personal director guarantees.
Process Application and Refinance Your Business Loans
Working hand-in-hand with you, we:
- Clear existing debts with the capital raised.
- Coordinate the transfer of asset securities between lenders.
- Implement the new repayment structure.
Securities for Business Loan Refinancing
Securities are an essential component of refinancing, mitigating lender risk to obtain the best rates and most flexible terms. While the majority of commercial refinancing is secured against high-value tangible assets, specialist lenders who understand the asset-light nature of many modern businesses will consider a range of alternatives to provide the collateral needed to secure refinancing.
- Property - Commercially owned property provides comprehensive traditional security for finance. First, second, and third-charge financing is available, enabling maximum leverage of property equity. CPF’s commercial mortgage and bridging specialists work in alignment to provide both short-term options and long-term finance solutions secured through property portfolios.
- Traditional tangible assets - Equity in high-value machinery, equipment, and vehicles can be quickly leveraged to provide the necessary securities for lenders.
- Stock - Specialist stock and inventory finance can be used as part of a comprehensive refinancing portfolio.
- Other high-value tangible assets - Businesses that have invested in high-value non-stock assets can leverage those items for debt securities. These include fine art, premium collectables, classic cars, and more.
- Accounts receivable - Invoice finance is a powerful option for B2B companies that lack tangible assets, including service companies with little physical infrastructure.
- Purchase order and contract finance - Reliable future income provides specialist lenders with the assurance needed as a loan security. For tech companies and other enterprises with a lack of tangible assets, client-based guarantees and validated subscription statistics offer a viable alternative.
- Investments - Your company’s investment portfolio is a traditional intangible asset accepted by many lenders.
- Director’s personal guarantee - For limited companies, a director’s personal guarantee can provide the essential collateral needed to secure a loan.
Lender underwriting will result in different rates and terms based on the size and type of securities provided with the highest loan-to-value (LTV) offers provided for high-value tangible assets such as property.
Asset-light businesses should not be concerned that they don’t provide a portfolio strong enough to refinance existing loans - savvy lenders assess the overall strength of your business, not just the tangible assets. Turnover consistency and well-developed, contract-supported forecasts are increasingly considered as viable intangible securities when assessing business affordability and borrower consistency.
Part of our role at Clifton Private Finance will be to form a comprehensive asset profile to minimise risk for the lender and optimise refinancing rates.
Raising Capital by Refinancing Your Business Loans
Refinancing is typically considered when the weight of existing financing is straining cash flow; however, refinancing is also a powerful tool when looking to raise capital for new ventures.
When equity exists in current assets, the path to injecting capital is clear: higher LTV loans can be obtained, immediately delivering cash into accounts.
A well-structured debt portfolio lifts the weight of existing repayment obligations even without leveraging more equity for capital. By exploring your wider business administration, this stability and liquidity can be successfully utilised to open doors to opportunities - both present and future.
As part of your refinancing process, discussing your potential future plans and projects with your CPF advisor will allow us to strengthen your credit profile, smoothing outgoings, and delivering an updated and streamlined funding platform that ensures doors are quickly opened when expansion opportunities come knocking.
Timing Debt Restructuring
Refinancing your existing loans when the pressure is mounting can give you the breathing space you need to move forward, but by timing your restructuring when you are more able to explore the options and balance advantages and disadvantages will lead to a superior arrangement.
Consider:
- Market forces - Timing your refinancing to make the most of market rates can reduce your interest burden significantly. Planning for a later refinancing if interest rates are at a high can give you the time to develop a better plan that can be quickly implemented when the time is right, while locking in early with variable rates can give you improved terms.
- Your current terms - Existing credit facilities can expire, and fixed-rate terms will come to an end. Refinancing should be timed to take place before low rates roll into bank standard variable rates (SVR) or credit limits are reduced.
- Fees - Early repayment charges may come into force if you pay off existing loans before the end of their term, while arrangement and legal fees can add to the cost. Balancing these against the benefit of the refinancing is important.
- Paperwork - Lenders will require up-to-date financial information for your business. Preparing this in advance of your application will smooth the process and reduce delays.
- Underwriting - Refinancing business loans takes time. Lenders will have to value securities and undertake a period of due diligence. While at CPF, we do what we can to speed the process, you should still plan for a lengthy underwriting process which typically spans 3-6 weeks. Where expediency is essential, we can work with you to put in place bridging finance to cover the gap.
Refinancing Business Loans with Clifton Private Finance
At Clifton Private Finance, we are expertly placed to offer you a comprehensive and effective loan restructure. As an independent business finance broker, we have access to the full marketplace of UK lenders, including traditional high-street banks, newer challenger banks, and specialist lenders, allowing us to tailor a refinancing plan that properly suits your business.
For a professional and confidential financial assessment, contact Clifton Private Finance for a consultation today.
