Are you looking for a way to make your business debt more manageable and reduce the cost of borrowing? The concept of debt refinancing may be the key to achieving these goals.
Here, we will explain what debt refinancing is, how it works and how it could help you navigate management of your finances in difficult times.
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Best business debt refinancing providers UK
| Loan provider | Minimum loan | Maximum loan | Maximum term |
|---|---|---|---|
ABC Finance | £500 | £1,000,000 | 5 years |
ArchOver | £100,000 | £5,000,000 | 3 years |
Aspire Business Loans | £5,000 | £300,000 | 5 years |
Atom Bank | £100,000 | £5,000,000 | 6 years |
Bank of Scotland | £1,000 | £1,000,000 | 25 years |
Barclays | £1,000 | £100,000 | 10 years |
Bibby Financial Services | n/a | n/a | 2 years |
Bluestar Leasing | £5,000 | n/a | 5 years |
Braemar Finance | n/a | n/a | n/a |
Capify | £5,000 | £500,000 | 12 months |
CapitalBox | £2,000 | £50,000 | 18 months |
Catalyst Finance | £25,000 | £1,000,000 | 12 months |
ClearFunder | £10,000 | £100,000 | 12 months |
Close Brothers | n/a | n/a | n/a |
Clydesdale Bank | £25,001 | £10,000,000 | 15 years |
Co-operative Bank | £1,000 | £250,000 | 15 years |
Cubefunder | £5,000 | £100,000 | n/a |
Fleximize | £5,000 | £500,000 | 4 years |
Folk 2 Folk | £50,000 | n/a | 5 years |
Funding Circle | £2,000 | £250,000 | 6 years |
Hitachi Capital | £10,000 | £500,000 | 5 years |
Hope Capital | £50,000 | £5,000,000 | n/a |
HSBC | £1,000 | £25,000 | 20 years |
Huddle Capital | n/a | n/a | 12 months |
Independent Growth Finance | n/a | n/a | n/a |
inFund | £5,000 | £150,000 | 12 months |
Intelligent Loans | £10,000 | £250,000 | 5 years |
Iwoca | £50,001 | £250,000 | 3 years |
LendingCrowd | £5,000 | £500,000 | 5 years |
Liberis | £50,001 | £150,000 | 2 years |
Lloyds Bank | £1,000 | £1,000,000 | 25 years |
Market Finance | £5,000 | £250,000 | 3 years |
Merchant Money | £5,000 | £500,000 | 2 years |
Metro Bank | £2,000 | £25,000,000 | 30 years |
NatWest | £1,000 | £10,000,000 | 25 years |
Novuna | £10,000 | £500,000 | 5 years |
Nucleus Commercial Finance | £10,000 | £250,000 | 6 years |
PFC Finance | £5,000 | £1,000,000 | 5 years |
Rangewell | n/a | n/a | 5 years |
Rebuildingsociety.com | £25,000 | £250,000 | 5 years |
Royal Bank of Scotland | £1,000 | £10,000,000 | 25 years |
Santander | £2,000 | £25,000 | 5 years |
Satellite Finance | £3,000 | £1,000,000 | 10 years |
Spotcap | £50,000 | £350,000 | 24 months |
Starling Bank | £5,000 | £20,000 | 5 months |
Start Up Loans | n/a | £25,000 | 5 years |
ThinCats | £1,000,000 | £15,000,000 | n/a |
White Oak | £2,000 | £500,000 | 5 years |
What is debt refinancing?
Debt refinancing is the process of replacing an existing loan with a new loan that offers better terms and conditions. This can include lower interest rates, different repayment schedules, or even combining multiple loans into one. Refinancing can help borrowers save money on their debt by reducing their monthly payments and overall cost over time.
It can also help borrowers consolidate their debt in order to simplify their financial situation.
In addition, debt refinancing can provide extra funds that can be used for other purposes such as investments or home improvements. Refinancing is typically done when interest rates are low and the borrower’s credit score has improved since taking out the original loan. However, it is important to note that refinancing can also extend the term of a loan and increase the total amount of interest paid over time.
Before refinancing, it is important for borrowers to carefully consider their financial situation in order to determine if this option is right for them. It is important to make sure that any benefits gained from debt refinancing will outweigh the costs.
How does debt refinancing work?
Debt refinancing works by replacing an existing loan with a new loan that offers more favorable terms. This can include lower interest rates, longer repayment schedules, and even combining multiple loans into one. The borrower’s credit score will be used to determine their eligibility for the refinanced loan.
Once the refinancing process is complete, the borrower will begin making payments on the new loan. The amount of money saved from refinancing depends on how much of the interest rate was reduced and how long the repayment period is extended.
How to do debt refinancing
How to refinance debt
- Research different lenders and compare their terms and conditions
Before refinancing, borrowers should take the time to research different lenders and compare their terms in order to get the best deal. Look for lenders that are regulated by the FCA where possible. Borrowers should also consider any fees or closing costs associated with refinancing in order to make sure they are getting the most affordable option.
- Gather the necessary documents
Borrowers will need to provide financial information such as bank statements, proof of income, and other documents in order to apply for a refinanced loan.
- Submit your application
Once all of the required information is gathered, borrowers can submit their application with the chosen lender.
- Receive and review the loan offer
After submitting their application, borrowers will receive a loan offer from the lender. It is important to thoroughly review this offer in order to make sure that it meets the borrower’s needs and expectations.
- Sign the new loan agreement
Borrowers should read and understand the terms of the new loan agreement before signing. Once the borrower signs, they will officially be in a refinanced loan with the chosen lender.
How much does debt refinancing cost?
Debt refinancing typically involves closing costs such as points and origination fees. These costs can range from 0.5-2% of the total loan amount, so borrowers should make sure to factor in these costs when deciding whether or not to refinance their debt.
In addition, some lenders may also charge a prepayment penalty if the borrower pays off the loan ahead of schedule. It is important to read and understand all of the terms and conditions before refinancing in order to avoid any unexpected costs.
Business debt refinancing FAQ
Businesses can refinance their debt in much the same way as individuals. Borrowers should research different lenders and compare their terms before submitting an application with all the necessary documents. Businesses may also be able to qualify for government-backed loan consolidation programs which could offer more favorable repayment terms.
Borrowers with a high debt to income ratio may have difficulty qualifying for a loan, but there are options available. One of the most popular is to look for lenders that may offer a higher loan-to-value (LTV) ratio. This means that they are willing to accept a higher percentage of your total debt — up to 100% in some cases.
Companies may refinance their debt for a variety of reasons. It could be to take advantage of lower interest rates, extend the loan’s repayment period, or consolidate multiple loans into one. Refinancing can also provide access to additional funds that can be used for growth and expansion.
Business debt refinancing is the process of replacing existing business debt with a new loan or credit facility, often with better terms such as lower interest rates, reduced monthly payments, or extended repayment periods.
Common reasons include:
Lowering interest rates – Securing a more competitive rate to reduce overall borrowing costs.
Reducing monthly repayments – Extending loan terms to free up cash flow.
Consolidating multiple debts – Combining loans into one manageable repayment.
Improving financial stability – Restructuring debt to match the business’s current financial position.
Refinancing involves taking out a new loan to repay existing debt. This can be done with the same lender or a new provider, depending on the terms available. Once approved, the new loan settles the outstanding balance, and the business repays under the new agreement.
Businesses can refinance various types of debt, including:
Business loans (secured or unsecured)
Business overdrafts
Invoice finance facilities
Asset finance agreements
Merchant cash advances
Credit card debt
Lower borrowing costs – Reduce the total interest paid over the loan term.
Simplified repayments – Consolidate multiple debts into one payment.
Improved cash flow – Lower monthly payments can free up funds for operational needs.
Better financial flexibility – Adjust terms to match business growth or economic conditions.
Higher overall costs – Extending the repayment term may lead to more interest paid over time.
Early repayment fees – Some existing loans have penalties for early settlement.
Additional fees – Arrangement fees, valuation costs, and legal fees may apply.
Potential credit score impact – Applying for new finance can temporarily affect credit ratings.
Lenders typically assess:
Credit history – Business and personal credit scores.
Financial statements – Profit and loss accounts, cash flow reports, and balance sheets.
Debt-to-income ratio – The proportion of income used to service debt.
Business trading history – Longevity and profitability of the business.
Startups may find it challenging to refinance due to limited trading history and weaker credit profiles. However, options such as government-backed schemes or alternative lenders may be available.
Arrangement fees – Charged by the new lender.
Early repayment charges – Imposed by the existing lender for settling debt early.
Legal and valuation fees – If refinancing involves secured lending.
Not necessarily. Debt consolidation combines multiple debts into a single loan, while refinancing replaces an existing loan with a new one, which may or may not include debt consolidation.
The timeframe varies depending on the lender and complexity of the application. Simple refinancing can take a few days, while larger or secured loans may take weeks.
Yes, but options may be limited. Alternative lenders may provide refinancing, but often at higher interest rates. Securing the loan with assets may improve approval chances.
Typically, businesses need to:
1. Assess existing debt and identify refinancing goals.
2. Compare lenders and available loan options.
3. Gather financial documents (accounts, cash flow reports, and credit history).
4. Submit an application and await approval.
5. Once approved, use the new loan to repay existing debt.
Debt restructuring – Negotiating new terms with existing lenders.
Invoice financing – Using unpaid invoices to boost cash flow.
Business grants or equity finance – Seeking funding without taking on more debt.
It may have a temporary impact due to credit checks, but successfully managing the new loan can improve your credit rating over time.