If you’re like most start-up business owners, you took out loans from at least a few sources to get your new company off the ground. After a few years as a successful entrepreneur, you are still repaying these loans with various interest rates and at different times of the month. Would debt refinancing make your life easier?

Understanding Debt Refinancing

Refinancing your debt simply means that you take out a new loan that is large enough to pay off all your existing loans. The benefits from this decision are often immediate, such as having a more manageable monthly payment and only needing to remember to make one loan payment each month. Qualifying for loans with high interest rates may be all you could manage as a new business owner but having a few years of experience could earn you a lower rate.

Your cash flow could also improve right away with just one loan to repay each month. That means you have more funds available to put towards growing your business and not be stuck paying your start-up costs for years to come.

Are There Any Downsides to Debt Refinancing?

All financial transactions have pros and cons and refinancing your debt with a new and larger loan is no different. For starters, your lender will obtain a copy of your business credit report and possibly your personal credit report as well. The inquiries, along with the fact that you have opened a new account, could temporarily lower your credit score. The lower score could prevent you from obtaining the most favorable loan terms in the future.

We also recommend that you check with the lenders that hold the accounts you want to pay off with the new loan to ensure they don’t charge an early payoff penalty. Having to pay more money to pay off your existing loans early could defeat the purpose of debt refinancing entirely.

Green Apple Funding is here to walk you through the pros and cons so you can decide if this option is right for you. Please contact us with any questions or to start a new loan application.