Expert brokers at Business.Finance work with owners and operators on refinancing equipment loans to ease cash flow pressures with workable funding solutions. The current economic environment is creating challenges in many sectors. Leading business owners and operators to review their overall financial situation and identify where savings may be realised to improve the bottom line and provide greater stability.
Where machinery and other asset finance payments represent a significant monthly expense, seeking to refinance current loan arrangements may present a workable way forward. Refinance is available to all types of commercial enterprises for all types of funding arrangements. The decision to refinance requires consideration of multiple aspects of the process and the possible outcomes.
Know What’s Involved with Refinancing Equipment Loans
The process to refinance an existing funding arrangement essentially involves applying for a new loan to replace the existing contract. This can be done at any point during a loan term. The refinanced loan generally includes both the repayments and balloon/residual due on the current loan, plus fees and charges for exiting the contract early, as well as the new loan establishment charges.
The reasons why an operator may seek to refinance defines the way our experts approach sourcing a solution. It may be a lower rate of interest, generally lower the monthly repayment, to have certain conditions removed from the loan contract, or to change to a different credit facility.
The new funding can be with the same or different credit facility as the existing funding. The options being Rent-to-Own, Lease, Hire Purchase and Chattel Mortgage. The benefits and features relevant to the facility select apply with refinance. These include the tax benefits, balloon, buyback and residual.
Refinance may be with the current lender or with a different provider. As we do when sourcing all finance, we cover off on our 80+ lender base for the best rates and offers when handling refinance applications.
One issue which operators should be mindful of is that used machinery rates and financing conditions would apply to the refinanced loan. Even if the asset was initially acquired new, after being used for a certain amount of time, it is now treated as used. This may impact rates, terms, and using the goods as loan security.
Interest rates on refinanced loans are offered based on current rates in the market. Rates vary across the commercial credit lending sector as lenders set their own rates according to their own market forecasts and these may vary from the Reserve Bank outlook.
Applications to refinance are assessed on the current financials and credit history of the business. Where an operator has an improved position since applying for the current funding, refinance may present the opportunity for a better funding outcome. Especially in regard to any restrictive conditions which may previously have been applied such as additional collateral, personal guarantees, and limited loan amounts.
Refinancing Equipment Loans to Reduce Monthly Payments, Ease Cash Flow
Reducing the monthly amount payable on a machinery loan is one of the key reasons that business owners will seek to refinance. By reducing that monthly commitment, businesses may ease cash flow pressures and place the operation in a better position.
When pursuing this objective, we consider a number of options – a lower rate of interest while maintaining the same term and balloon; a longer loan term; and a larger balloon. These strategies can reduce the monthly commitment, but the outcome may depend on the total loan amount. This does have to include the payout figure plus the applicable lender fees and charges.
We obtain the payout figure from the current lender to establish the loan total needed to be refinanced and then source the offer that best meets the operator’s objectives. There is no obligation to proceed if any offer does not present an improved position for the business.
Alternatives to Refinancing to Consider
As specialists in commercial financing, we offer a full range of credit facilities to support business enterprises. Where a refinance offer does not provide a workable option, we work with operators to present alternative solutions.
Alternatives to refinance may include a business overdraft, a short to medium term line of credit, or a secured or unsecured business loan to support the operation through the current situation being faced. Our experts can work through each option with individual operators and source quotes for consideration.
Apply for Refinancing with No Obligation
Refinance is more complicated than sourcing a new loan, but our application and approval process is as straightforward for all types of funding. The process starts with a briefing phone call with one of our experts where we can obtain the specifics, the objectives being sought, and present the options available.
To complete an application, financials will be required. We then source the best offer for consideration. There is no obligation attached to making enquiries or submitting an application. If your financing commitments are causing issues for your business, have a no obligation, confidential discussion with us on the workable solutions we can source for you.
For a workable way forward through refinancing equipment loans, contact Business Finance on 1300 000 033
DISCLAIMER: THE SPECIFIC PURPOSE IN PROVIDING THIS ARTICLE IS FOR GENERAL INFORMATION ONLY. IT IS NOT INTENDED AS THE SOLE SOURCE OF FINANCIAL INFORMATION ON WHICH TO MAKE BUSINESS FINANCE DECISIONS. BUSINESS OWNERS WHO REQUIRE ADVICE OR GUIDANCE AROUND THEIR SPECIFIC FINANCIAL CIRCUMSTANCES ARE RECOMMENDED TO CONSULT WITH AN ADVISOR OR ACCOUNTANT. NO LIABILITY IS ACCEPTED IN REGARD TO ANY MISREPRESENTATIONS OR ANY ERRORS RE ANY DATA, SPECIFICS, POLICIES AND OTHER INFORMATION AS SOURCED FROM OTHERS.
