Switchboard Finance logo

Refinancing

Refinancing is the process of replacing an existing loan or finance facility with a new one, usually to secure better interest rates, adjust repayment terms, or consolidate multiple debts into a single, more manageable facility. Australian SMEs often refinance Secured Business Loans, Unsecured Business Loans, Term Loans or Short-Term Loans to improve cashflow and reduce total interest costs.

Refinancing can also work alongside cashflow tools like Working Capital Loans, a Business Line of Credit or Invoice Finance to create an overall Business Cashflow System.

Why Refinancing Matters for SMEs

The right refinancing move can free up working capital, reduce monthly repayments and give business owners more breathing room. It’s especially relevant for businesses in the Business Owners Finance Hub, Tradie Hub, Truckie Hub, Café Hub and Whitecoat Hub, where cashflow often swings with seasons, contracts or ATO obligations.

  • Reduce interest costs or fees compared to an older facility.
  • Extend the loan term to smooth repayments and ease cashflow pressure.
  • Consolidate multiple debts into one structured business loan solution.
  • Unlock equity or free up security tied to existing facilities.
  • Move away from restrictive loan covenants or tight credit limits.

A broker will also consider your borrowing capacity, upcoming ATO and BAS commitments, and whether a Working Capital Loan or Business Line of Credit better matches how your cashflow moves.

How Refinancing Works in Practice

Refinancing is usually triggered when your current loan no longer fits the business — maybe rates have dropped, the business has grown, or repayments are too aggressive for current cashflow.

  • Review existing loans: balances, interest rates, remaining term, fees and early termination clauses.
  • Compare options: alternative banks, non-bank lenders and specialist business lending products.
  • Apply for a new facility: lenders assess trading history, bank statements and your credit profile.
  • Settle the refinance: the new loan pays out the old facility, with a clear payout figure at settlement.
  • Operate under new terms: you move forward with updated repayments, structure and security.

For some owners, the most powerful move is combining refinancing with a flexible Business Line of Credit or Invoice Finance so everyday cashflow isn’t trapped inside a rigid term facility.

Example: Using Refinancing to Fix Cashflow Pressure

A café owner in the Café Hub may have stacked a high-interest short-term loan, equipment finance and an overdraft. By refinancing into a structured business loan solution plus a small line of credit, they can:

  • Roll multiple debts into one clear facility.
  • Stretch repayments to match realistic café cashflow.
  • Use the line of credit for lumpy supplier bills, as covered in Café LOC for Suppliers.

The same logic applies for tradies and truckies upgrading vehicles and gear via Vehicle Finance and Equipment Finance — refinancing can tidy old deals while lining up new low-doc approvals for growth.

Related Switchboard Resources

Official guidance for Australian businesses on finance options and refinancing is available at business.gov.au.

Why would a business refinance instead of keeping the current loan?
To lower interest, smooth repayments, consolidate multiple debts or free up equity and security. Refinancing can also move you into a structure that aligns better with tools like Working Capital Loans or a Business Line of Credit.
Does refinancing always require new security?
Not always. Some refinances keep the same security, while others shift from an unsecured to a secured structure to improve pricing. It depends on the lender, loan size and your overall borrowing capacity.
Can refinancing improve day-to-day cashflow?
Yes. Extending terms, reducing rates or consolidating multiple facilities can significantly reduce monthly repayments. Many business owners pair a refinance with flexible products like Invoice Finance so customer invoices turn into available cash faster.