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Signs it’s Time to Refinance Your Business Debt

By November 30, 2022Business Advice
Refinance business debt funding options money advice

Most small business owners must borrow the money they need to get started or engage in business-related tasks such as new product testing, acquisitions, and more. Fixed-rate loans are predictable, so you can move your business in the right direction while maintaining control. You may find a need later on to refinance your business debt.

In the future, refinancing that business debt will allow you to take out a larger loan to cover the existing debt, as well as new business tasks, such as hiring new employees, purchasing new inventory, and more.

If your business is located in or near Cincinnati, let Orcutt & Co. help you manage your business debt. We are a small, family-owned business specializing in daily accounting and bookkeeping tasks, payroll management, and tax prep. We can help you see the benefits of refinancing your business debt.

How do you know when it’s time to refinance your business debt? We’ll explain below.

7 Signs You Should Refinance

We have done the research and discovered 7 signs that you should consider refinancing your business debt.

You have excellent business credit

The interest rate on a loan is typically based on credit score. If you and/or your business have an excellent credit score, consider reaching out to a lender to receive the funds you need. A small business loan, whether a fixed-rate traditional loan or a small business loan backed by the SBA, is a great way to refinance your business debt.

You have good DTI

DTI, or debt-to-income ratio is important when it comes to taking out a loan. If your business is making more than it is spending, refinancing your business debt will give you the capital you need for growth. This is because you can reduce your interest rate and have more time to pay off your debt. When you have a good DTI, it shows that you are profitable and reduces the lender’s risk.

You’re ready to pay off the loan, but face penalties for early repayment

If you are ready to pay off a loan right now, but face penalties for doing so- consider refinancing the loan with other business debt, such as an SBA loan and/or business credit card debt. Refinancing your business debt can give you more favorable repayment terms.

You can create more favorable repayment terms

When it comes to getting a business loan, small businesses struggle- even though they support most of the American economy. If a borrower doesn’t have excellent personal or business credit, terms often favor the lender. However, as time goes on, you can seek new loans to repay old ones. One form of debt that often has unfavorable repayment schedules is business taxes. By taking out a loan to refinance your business taxes, you can create a schedule that works for you.

You need to reschedule your payments

In order to manage your business debt, it’s important to control expense scheduling as much as possible. This means ensuring that Accounts Payable and Receivables are aligned. If not, you may end up paying your bills late- which impacts your credit score. The best way to solve this problem is to refinance your debts into a different loan.

Your payment frequency is not ideal

In addition to payment schedule, the frequency of invoices is a major factor in your working capital and cash flow. For example, if you work on a net-90 schedule, but must make payments on a net-30- it can quickly create a sticky situation. Some loans are more flexible, which makes refinancing a good solution.

Your growth is tapering

Let’s say your business growth has started to taper off. Refinancing your existing business debt can help you access more capital to help you grow- as well as provide repayment terms that are more favorable. The key to refinancing your business debts for growth is scalability. Your potential for growth should be high.


No matter what type of business you own, it’s always important to maintain control of your business debt. In some cases, the best way to do this is to refinance your existing debt.

The professionals at Orcutt & Co. can help. We can analyze your current situation and help you determine if refinancing could help you at this time or if you may want to consider another route. When you are able to retain control over repayment schedules and frequency, it can reduce your stress and increase your ability to repay your debts.