Thinking About Small Business Refinancing?

Once your business is up and running, a time may come when you need to consider business refinancing. Refinancing small business loans may help you get a better loan rate and help keep your credit score from going down. Before you start refinancing any SBA loan, take a look at these considerations to help you decide whether or not it is a good idea. Understanding the reasons why you want to refinance and making sure they are valid is also a good way to determine if you should consider business refinancing.

Extra Cash

Are you refinancing to get extra cash? If so, what will you use the extra cash for? Make sure there are no limits to the uses for the extra cash you get with the refinance. This way you'll have extra capital for business expansion, more materials, or whatever you need. The extra cash from a refinance will be beneficial for the business because saving it will prepare the business for whatever may come its way.

Lower Payment or Interest Rate

If debt is the problem and extra cash is not an issue, trying to get a lower payment or lower interest rate is a good idea. This will help the business save money over time which can be put to a variety of uses. Shop around and see who is willing to offer you the best rate/payment combination, but also consider the other elements of why you want to refinance the loan. Don't forget your overall goals and objectives with the business.

Credit Score

If your credit score is suffering for any reason, the ability to refinance, especially for a lower payment or interest rate may be very difficult. If the credit score has greatly improved since the original finance, you may be able to refinance for a lower rate and payment and even get extra cash, too. Try improving the credit score by paying down some debt and making a few on time payments before attempting to refinance.

Other Options

If the business needs extra cash and doesn't have good credit, an option could be a credit card receipt loan. If the business needs to save money but doesn't have good credit, cut expenses by shopping around with vendors and looking into ways to maximize investments and save on utilities. If the money needed isn't a large amount, you can also consider microloans (loans up to $35,000 where credit may not play a large role in the decision process) or a credit card.