Refinancing a business loan means replacing your existing facility with a new one, usually to get a lower rate, better terms, or to consolidate multiple debts into a single repayment. It can genuinely save a business thousands of dollars over the remaining term, but it is not automatically worth doing just because a lower headline rate is advertised somewhere.
This guide covers when refinancing a business loan actually makes sense, what it costs to switch, and how to work out whether the numbers stack up before you commit.
Refinancing replaces your current business loan with a new one, either from your existing lender on new terms or from a different lender entirely. The new loan pays out the balance owing on the old one, and you continue repaying under the new facility’s rate, term, and structure from that point forward.
Businesses typically refinance to:
Refinancing is worth pursuing when the savings or benefits clearly outweigh the cost and effort of switching. That generally means one or more of the following is true:
Our Business Loan Interest Rates guide covers what current rates actually look like and what drives them, which is the starting point for working out whether refinancing would put you in a genuinely better position.
Switching lenders is rarely free, and the costs need to be weighed against the projected savings before you decide.
ASIC’s Moneysmart has independent guidance on refinancing and the fees involved, worth reading before you approach a new lender, since some of these costs are negotiable and others are not.
The comparison that matters is total cost over the remaining term, not just the headline rate on the new offer.
If the new total, fees included, comes in meaningfully below your current total, refinancing is doing its job. If the gap is marginal, the effort and paperwork involved in switching may not be worth it for a small saving.
Refinancing is also the natural point to reconsider whether your current loan structure still fits your business. A business that started on an unsecured facility because it had no assets and no trading history may, a few years later, have both, and could refinance into a secured loan at a meaningfully lower rate. Our Secured Business Loans and Unsecured Business Loans pages cover how each structure works, and our Business Loan Requirements guide sets out what a lender will assess for either.
If your business is repaying several separate facilities, an equipment loan, a line of credit, and a short term unsecured loan, refinancing into one consolidated facility can simplify cash flow and, depending on the rates involved, potentially lower your combined repayment. The trade off worth checking carefully is term length: consolidating short term debt into a longer term facility can lower your monthly repayment while increasing the total interest paid over time, so it is worth comparing the combined total cost of the separate loans against the consolidated option before committing.
Business loan interest rates move with the Reserve Bank of Australia’s cash rate, which has been on an upward path through 2026. That does not rule out refinancing being worthwhile, particularly if your business’s own risk profile has improved since your original loan was approved, but it does mean refinancing purely on the expectation that rates will fall further is a weaker bet right now than it might have been in a falling rate environment. The stronger case for refinancing at the moment is usually business specific: an improved credit position, a need to consolidate, or a genuine mismatch between your current structure and what your business needs today.
Comparing a refinance properly means checking your options across multiple lenders, not just accepting what your current lender offers to retain you or what one alternative lender advertises. Lodestar Finance compares business loan refinance options across a panel of lenders, working out the genuine total cost comparison, fees included, before you commit to switching.
FAQs
Applying for a new facility typically records a credit enquiry, and closing the old loan is recorded as well. Comparing lenders through a broker before formally applying limits how many separate enquiries appear on your file.
It is more difficult, though not impossible, particularly if the reason you are refinancing is to move away from a loan taken out during a weaker credit period. Improving your position first, as covered in our Business Loan Requirements guide, generally leads to better refinancing outcomes.
There is no fixed minimum, but doing so very early often means break costs or exit fees outweigh any saving. It is worth running the total cost comparison regardless of how recently the original loan was settled.
Yes, this is a common reason to refinance once a business has property or assets available that it did not have when the original unsecured loan was approved, generally resulting in a lower rate.
It depends on the switching costs involved. A small monthly saving can still be worthwhile over a long remaining term, but if exit fees and new establishment costs are high, the payback period may be longer than it first appears, so compare the full totals rather than the monthly figure alone.
A fast business loan can genuinely settle within 24 to 48 hours in the right circumstances, but “instant approval” in the literal sense doesn’t exist
Getting a start up business loan is harder than financing an established business, because the thing most lenders rely on most, trading history, doesn’t exist
Having bad credit makes getting a business loan harder, not impossible. Mainstream lenders rely heavily on your credit file, but it isn’t the only thing
