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Business refinancing

Business refinancing and debt consolidation for UK businesses

Business refinancing means replacing your company’s existing borrowing with a new facility. Debt consolidation means combining several facilities into one. Either can change your repayments, your term, the security a lender holds and the total you repay, and neither is right for every business.

If your company already has business borrowing and you’re weighing up a different structure, Wize Finance can help you see which types of business finance may suit it.

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Tell us about your current repayments and what you'd like to change. The team reviews your enquiry and discusses whether refinancing may help.

Refinancing and debt consolidation: what’s the difference?

The two often overlap. Consolidating several debts is a form of refinancing, and many companies look at both at once. That’s why this page covers both.

This page is about business borrowing by UK businesses: loans, cards, overdrafts and other finance taken out by the business. It doesn’t cover personal debts or personal debt solutions.

  • One facility

    Refinancing

    means taking out a new facility to pay off an existing one. A company might refinance a single business loan to change its term, its repayment pattern or the lender it borrows from.

  • Several into one

    Debt consolidation

    means combining several existing facilities, often from different lenders, into one. Instead of several repayments on different dates, the company makes repayments on one facility.

How refinancing changes your company’s borrowing

When a company refinances or consolidates, it moves from what it owes today to a new structure. Before deciding whether the new structure is better, check what changes at each stage.

Today: your existing facilities. For each one, check:

  • who the lender is
  • how and when you repay
  • when it ends
  • whether it’s secured, and against what
  • whether a director has given a personal guarantee

The switch: what happens at the changeover.

  • Each existing lender provides a settlement figure.
  • Early repayment or exit charges may apply.
  • The new facility may have its own fees.
  • Existing security is released or replaced.

Proposed structure: the new facility. Check the same points: lender, repayments, term, security and guarantees.

What may change:

  • fewer repayment dates
  • a different term, which may be longer or shorter
  • different security or guarantees
  • the total cost over the full term, which may be higher or lower than what you pay today

What can change when you refinance

A new facility isn’t just the same debt in a new wrapper. Several things can change at once:

Lower regular repayments don’t mean a lower total cost. If the new facility runs for longer, or adds fees, your company may repay more overall, even though each repayment is smaller. Always compare the total cost over the full term.

  1. Your repayments. The amount and frequency of repayments may change, and consolidating several facilities can reduce the number of payment dates to manage.
  2. Your term. A longer term can lower each repayment, but it usually means paying interest for longer. A shorter term can raise each repayment but may reduce the interest paid overall.
  3. Your security. A new facility may be secured where your existing borrowing wasn’t, or the reverse. If it’s secured, the lender may take a charge over business assets or property. See Secured Business Loans for how security works.
  4. Your personal guarantees. A lender may ask a director for a personal guarantee. That’s separate from any security over the company’s assets.
  5. Your lender. You might refinance with your existing lender or move to a different one, depending on what each will offer.

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Want to compare your funding options?

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Before you switch: settlement figures and exit costs

The real cost of refinancing includes what it takes to leave your existing facilities. Before agreeing to anything new, gather the facts on what you have now.

What’s a settlement figure? It’s the amount your existing lender says is needed to clear a facility in full on a particular date. It can include interest to that date and any early repayment charges. Ask each lender for one in writing.

Before you refinance or consolidate, compare:

Compare before you switch 0 / 10

When refinancing may not help

Refinancing isn’t always the right answer, and Wize Finance can talk these points through with you before you go further. It may not help where:

  • Exit costs outweigh the difference. Early repayment charges on existing facilities can cancel out any change in cost.

  • New fees add to the total. Arrangement and other fees on the new facility are part of the real cost.

  • A longer term costs more overall. Smaller repayments over a longer period can mean repaying more in total.

  • Security or guarantees increase. Combining unsecured debts into a secured facility can put business assets at risk, and a new personal guarantee can add personal liability for a director.

  • The underlying problem isn’t the debt structure. If borrowing has built up because income is falling or costs are rising, rearranging the debt may ease the pressure for a while without fixing the cause.

  • The business is already behind on repayments. Lenders may be less able to offer new borrowing to a company in arrears or default, so refinancing options may be limited.

If your business is in financial difficulty

If your company is struggling to keep up with repayments, refinancing may not be available or suitable. Free, confidential advice on business debt is available from Business Debtline, an impartial charity service, before you take on any new borrowing.

Business Debtline ↗

Debts companies commonly look to refinance or combine

Depending on the lender, a refinance or consolidation may cover business borrowing such as:

  • business term loans
  • merchant cash advances
  • business credit cards
  • business overdrafts
  • asset finance agreements
  • invoice finance facilities

Not every lender will consider every type of facility, and some agreements have their own rules about early settlement.

  • Releasing cash from equipment or vehicles your company already owns is asset refinancing. See Asset Finance.

  • Replacing an invoice finance facility with another one is covered on Invoice Finance.

  • Refinancing a commercial mortgage or investment property is covered on Commercial Property Finance.

What lenders may look at

Criteria vary between lenders. A lender considering a refinance or consolidation may look at:

  • how long the company has been trading
  • turnover and cash flow, and how comfortably the new repayments could be covered
  • existing borrowing, and how it has been repaid
  • the company’s and directors’ credit history
  • what security, if any, is available
  • why the company wants to refinance, and what the new structure would achieve

How Wize Finance can help

Tell us about your company and the borrowing it has today. Wize Finance uses that information to help you see which types of business finance may suit it. Any lender you’re introduced to makes its own decision and sets its own terms.

It helps to have to hand:

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To hand 0 / 5

When a different type of finance may fit better

  • You need new money for day-to-day running costs, not to replace debt: see Working Capital Loans.

  • You’re refinancing a larger amount: see Large Business Loans.

  • You want to borrow against property or business assets: see secured business loans (linked above).

  • You want to release cash from equipment or vehicles you own: see asset finance (linked above).

  • You’re refinancing commercial property: see commercial property finance (linked above).

Business refinancing FAQs

What’s the difference between refinancing and debt consolidation?

Refinancing replaces an existing facility with a new one. Debt consolidation combines several existing facilities into one. Consolidation is a type of refinancing, and many companies consider both together.

Can you refinance a business loan with the same lender?

Sometimes. Some lenders will consider changing the terms of an existing facility or offering a new one. Others won’t, in which case a company may look at moving to a different lender. It depends on the lender and the agreement.

What is a settlement figure, and how do I get one?

A settlement figure is the amount your existing lender says is needed to repay a facility in full on a particular date, including any interest and early repayment charges due. You can ask your lender for one, ideally in writing, before you commit to anything new.

Will refinancing lower my monthly repayments?

It may, but it isn’t guaranteed. Repayments often fall because the term is longer, and a longer term can mean your company repays more in total. Compare the total cost over the full term, not just the repayment amount.

Can a merchant cash advance be included in a consolidation?

It depends on the lender and on the terms of the merchant cash advance agreement. Some lenders may consider it as one of the facilities being combined, and others may not.

Will I need to give security or a personal guarantee?

Some lenders may ask for security over business assets, a personal guarantee from a director, or both. These are separate things, and a new facility may involve different arrangements from the ones you have now.

Can my company refinance if it’s behind on repayments?

Options may be limited. Lenders may be less able to offer new borrowing to a company in arrears or default. If your company is struggling to keep up, free advice is available from Business Debtline (see “If your business is in financial difficulty” above).

Can I refinance a Bounce Back Loan or another government-backed loan?

The Bounce Back Loan Scheme and the other Covid-era government-backed loan schemes are now closed to new applications. Whether an existing scheme loan can be refinanced depends on the lender and the scheme’s terms, so check your agreement and speak to your lender.

Looking at your company’s borrowing?

Tell us what your company owes today and what you’d like to change. Wize Finance can then help you see which types of business finance may suit it.

Start your enquiry