Re-financing, if done correctly, can transform the fate of a business, providing an extra injection of cash from a new and revised loan agreement. As with all business undertakings though, timing is everything.
In determining whether or not you should re-finance your business, it is important to first recognise what your short-term goal is, as this can vary from business to business. For example, one company may be seeking a new loan simply to consolidate numerous debts, whilst another may need to convert an adjustable-rate loan to a fixed-rate loan, so that interest rates stay constant.
Regardless of the type of loan, the most important thing to consider when re-financing is the interest rate itself. If the revised rates are at least one percent lower than your current interest rate, it’s probably worth exploring some re-financing options. In doing so, always remember to shop around for the best loan, taking into consideration payment terms, interest rates, application fees and the collateral needed to secure the loan.
Also crucial is your credit rating. In the current economic climate, banks are looking for higher credit scores more than ever. Before undergoing any re-financing application, make sure you review your credit score and resolve any negative issues or incorrect information that could harm your loan terms and, in some cases, affect your interest rate.
For a full explanation of re-financing and how do it successfully, download our guide below: