1. Improved cash flow and working capital
When you refinance existing business debt into a more manageable repayment schedule, you immediately reduce the monthly pressure on cash flow. This is especially useful if you are carrying expensive short-term loans or tax funding arrangements that are eating into your margins.
For example, refinancing a £200,000 facility from 4% to 3% over a 20-year term could lower repayments by around £100 per month, which adds up to more than £20,000 over the life of the loan. In many cases, these savings can outweigh the costs of refinancing within just a couple of years. That freed-up capital can be directed into operational improvements, marketing campaigns, or simply providing a safety buffer for seasonal fluctuations.
2. Consolidation of multiple debts into one manageable facility
Many businesses are juggling repayments for different types of finance, such as merchant cash advances, asset loans, and tax bills. Refinancing allows you to consolidate these into a single facility.
This not only simplifies your finances but also makes forecasting and budgeting more straightforward. By reducing the number of repayment dates and interest rates to track, you can cut down on administrative overhead and, in many cases, reduce the total interest you pay over time.
3. Release equity from existing assets
If you own valuable machinery, vehicles, or technology outright, those assets hold equity that can be unlocked through refinancing. This is known as hard or soft asset refinancing.
By refinancing equipment you already own, you can release cash tied up in those purchases and reinvest it in areas that will help your business grow. For example, the capital might fund a warehouse expansion, enable you to hire additional staff, or provide the working capital needed to take on a large new contract.
4. Strengthen your position ahead of growth or exit
A cleaner, more strategic debt structure can make your business more attractive to investors, buyers, or lenders. If you are planning an acquisition, gearing up for expansion, or considering succession planning, refinancing can help present a stronger financial position.
By replacing short-term or high-cost facilities with longer-term, competitive agreements, you can improve your balance sheet, potentially increase your valuation, and create a financial structure that supports sustainable growth.
5. Restructure expensive or outdated agreements
Finance arrangements that were competitive a few years ago might no longer be the best option today. Interest rates change, market conditions shift, and new lenders enter the market.
Refinancing gives you the opportunity to replace high-interest or inflexible loans with more suitable options. This can be particularly valuable in times of economic uncertainty or when recovering from market disruptions such as the Covid-19 pandemic. By locking in better terms now, you can reduce costs and improve financial resilience.
Making refinancing work for you
The right refinancing strategy starts with understanding your objectives.
Do you want to free up cash flow, simplify your debt, release equity, prepare for growth or replace outdated agreements? Once that’s clear, the right finance partner can help you structure a solution around your goals.
At Jones & Co, we take the time to understand your business to tailor a refinancing package that suits your sector and growth plans. With access to a wide network of boutique and specialist providers, we can find a solution with terms that work for you and your business.
If you are considering refinancing, now’s the time to explore it. With more specialist lenders in the market and competitive products available, you could be closer to unlocking new growth potential than you think. Get in touch with our expert team today to arrange your business refinancing consultation.
