Glossary
What is Refinancing?
Refinancing means replacing an existing loan with a new one, usually to get a lower rate, a longer term, a smaller payment, or better terms. Businesses often refinance after their credit, revenue or time in business improves enough to qualify for lower-cost options. Refinancing can also release equity from real estate. Consider prepayment penalties on the existing loan and fees on the new one, and compare the total cost over the remaining time you expect to carry the debt.
Example
After two years of steady growth, a business refinances a high-cost short-term loan into a lower-rate bank term loan.
Related funding
Term Loans: A lump sum with fixed payments for big, planned moves.
Related terms
Questions about an offer? Your advisor will explain every term.