Refinancing a business loan means replacing an existing loan with a new one — typically at a lower rate, longer term, or both. It makes sense when your credit or revenue has improved since the original loan, when rates have dropped, or when you need to reduce monthly payments to improve cash flow.
| Financing type | Business Financing |
|---|---|
| Typical amounts | Term loans $25K–$2M; equipment financing $10K–$500K |
| Decision time | As fast as 24 hours |
| Credit | All credit profiles considered; soft credit pull to start |
| Cost to apply | Zero cost to apply |
| Who we are | A business financing broker. We compare offers from our lender network; we are not a direct lender. |
In detail
Refinancing is worth doing when the total interest savings exceed the cost of the new loan (including any prepayment fees on the old loan and origination fees on the new one). Rule of thumb: if your rate drops by more than 2–3 percentage points and you have at least 12 months remaining on the old loan, the math usually works in your favor.
In detail
Total cost of existing loan: remaining balance × remaining payments. Total cost of new loan: new balance × new payments + any origination fees. If new total cost is lower after accounting for any prepayment penalty, refinancing saves money.
In detail
The same criteria as a new loan: credit score (ideally improved since the original), monthly revenue (ideally increased), time in business (now longer), and existing debt load. Lenders also check UCC liens from existing loans — these are removed at payoff.
Preparation checklist
Reading a guide is step one. Use this checklist to prepare before moving into a funding review.
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Product paths
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Term loans
Understanding factor rates
Qualification requirements
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Owners should compare fit, cost, timing, payment burden, documentation, and how each option supports the business goal.
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Do I qualify?
Most business owners who research this topic are eligible to begin a review. Here is what usually qualifies and what owners should not worry about.
Who qualifies
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A hard credit pull for the refinancing application creates a small, temporary impact (5–10 points typically). This is usually offset within 3–6 months. The long-term credit benefit of lower payments and reduced debt load typically outweighs the inquiry impact.
A prepayment penalty is a fee charged for paying off a loan early. Check your original loan agreement for language about 'prepayment,' 'early termination,' or 'buyout amount.' Factor-rate products (working capital, MCAs) often have buyout structures where the remaining payoff is calculated on the original full repayment amount — not on remaining principal.
Yes — consolidating high-cost MCAs into a lower-rate term loan is one of the most common refinancing use cases. You need 600+ FICO and 12+ months of business history for most term loan refinancing. A broker like lendfloCapital can match you to term lenders who specialize in MCA consolidation.
Written by lendfloCapital Editorial Team · Last updated
lendfloCapital is a business financing broker, not a lender. This page is general information, not financial, legal or tax advice. Rates, amounts and terms depend on the lender and your business.
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