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Tips for Refinancing High Interest Business Debt

Compare Interest Rates

The main reason to refinance debt is to get a lower interest rate. Shop around and compare rates from different lenders like banks, credit unions, online lenders, etc. See what kind of rate they can offer based on your business’s financial profile. Getting quotes from multiple lenders helps ensure you get the best possible rate.

Consider a Shorter Term

When you refinance, you can often choose a different loan term. Opting for a shorter term means you pay the debt off faster and likely pay less interest over the life of the loan. Just make sure the monthly payments still fit within your budget.

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Watch Out for Fees

Some lenders charge origination fees or prepayment penalties for refinancing debt. Ask lenders to clearly explain all fees associated with the loans to avoid any surprises. Then factor these fees into your cost/benefit analysis.

Assess Impact on Cash Flow

While the goal is to get a lower monthly payment, make sure the new payment amount still allows you to cover operating expenses and have room for profit. You don’t want the debt repayment to cripple your cash flow.

Consider Using Collateral

If you have business assets or equipment you can use as collateral, you may be able to qualify for a lower rate on a secured loan. The collateral reduces the lender’s risk. Just be prepared to potentially lose that collateral if you default on the loan.

Get Help from an Accountant

Consult with a small business accountant to go over your finances and get input on the best approach for refinancing. An accountant can help assess if refinancing makes sense, how much to borrow, and implications for taxes.

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Refinancing high interest debt can save money in interest costs. But it requires carefully evaluating the pros and cons of loan terms and impacts. With some expert input, you can likely structure a refinance that benefits your business. Let me know if you have any other specific questions!


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