How to tell whether a refinance actually saves money
Start with what you owe now, not what you originally borrowed. Get a payoff figure for each balance and ask how it is calculated. With many merchant cash advances, the payback amount is fixed when you sign, so paying early may not reduce what you owe unless the funder offers an early payoff discount. Get any discount in writing.
Then compare that remaining payoff to the total cost of the new loan over its full term, including origination fees and any closing costs. A refinance can still make sense if total cost rises slightly, as long as the lower payment meaningfully improves monthly cash flow. Just make that tradeoff on purpose, with both numbers in front of you.
When refinancing business debt is not worth it
If an existing balance is close to paid off, the fees on a new loan can outweigh the savings. Refinancing also does not solve the underlying problem if the debt came from operating losses. Lower payments buy time, but if the business is still losing money each month, the new loan is likely to be followed by more borrowing.
Be realistic about qualifying, too. Lenders that offer lower-cost refinancing generally want to see that your cash flow can cover the new payment and that existing balances are current. If you are behind on payments, talk to your current lenders first about modified terms.
Refinance and consolidation offers to approach carefully
Some products marketed as consolidation do not pay off your existing advances. Instead, they send you periodic deposits to help cover your current payments while you repay the new funder. This can lower your payments for a time, but it usually adds another layer of cost rather than replacing existing debt. Ask exactly which balances will be paid off at closing and get it in writing.
Also be careful with offers that require upfront fees before funding, ask you to stop paying existing lenders without a written agreement, or include contract terms you do not understand. Have an attorney review any agreement that waives your rights.