Editor's choice: First Down Funding business loans
- Works with bad credit and most industries
- Only 100 days in business required
- No credit check
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A “set it and forget it” approach might work for some business owners when it comes to loan debt. But if your business is growing quickly, has improved its credit or has collateral to put down for a new loan, you may be ready to refinance.
When you refinance a business loan, you take out a new loan to repay your previous lender. For most businesses, the goal is to save money by lowering interest rates — though some prefer to lower monthly payments by choosing a loan with a longer term.
To get the best deal, your business will need to have improved its revenue, decreased its other debt and have a steady cash flow. You and any business partners you have may also need to meet credit score requirements.
The exact process will depend on your lender, but in general, you’ll follow these steps:
To see your options, select your desired loan amount, annual revenue, time in business and personal credit score range. Then click Show loans.
The exact eligibility criteria vary from lender to lender, but you and your business will likely need to meet these basic requirements to get a good deal:
Refinancing may not be the right choice for your business — these questions can help guide you toward your decision.
If your business has multiple loans, especially loans with high rates or short terms, business debt consolidation may be a better choice. Unlike refinancing, consolidation allows you to combine multiple loans into one monthly repayment. While you’ll still end up with a similar end result, consolidation is best for multiple high-interest debts.
Refinancing generally brings with it a few benefits, including:
There are circumstances that make it better to stick with the loan you already have. Your choice to refinance or keep your current loan depends on the financial circumstances of your business and the risks and benefits of adjusting your loan arrangements.
Refinancing is meant to save you money, but you can expect to pay some fees. Fees can vary, but lenders should offer the cost of these fees upfront before you apply.
Refinancing a business loan can help your business succeed and grow, but you’ll need to weigh all your financing options as you make your decision. Not every loan needs to be refinanced, and you should be prepared to pay off the high fees of any previous loans before taking out a new one.
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