You’re at a crossroads with a pressing question about your business: Should you refinance your loan? While refinancing may not make sense for everyone, it could be the right solution if you’re still paying off old debt. Depending on your current circumstances, now may be the time to reap the benefits of refinancing your business loan.
You Have A High Rate
It’s possible that you can find a much better rate, especially if it’s been a while since you took out your business loan. Explore how much you save on interest rates and whether these add up in the grand scheme of things.
Your Company Is In A Better Financial Position
When you’re a small business owner, a lot can change in a few years. When you first take out a loan, especially if you’re using it to start a new business, you don’t have that much equity to show for your company. But if you can show that you manage finances well through factors like an improved credit score, you inspire confidence in lenders who feel comfortable lending to you at lower interest rates.
You Are Weathering Undesirable Loan Terms
If you took out a loan during struggling economic times, you may have had to borrow at not the most ideal rates. Many times, questionable business loans come with hidden fees and terms that can cause you nothing but nightmares. If you are having trouble with your lender, it may be time to seek a new one who will grant a loan with fairer terms. Start anew by refinancing from a more reputable lender.
You’re Playing The Long Game
One of the greatest benefits of refinancing is the opportunity to boost cash flow by reducing the monthly amount that you have to set aside for interest payments. While there are costs associated with refinancing such as application and appraisal fees, you could be saving money in the lower term at a lower rate. If the numbers add up, refinancing could save you serious money for the long haul.
Remember, there are fees involved in refinancing any loan, and each of the above elements is merely one part of a larger equation. Take the time and do the math. If the numbers come out in your favor, then now could very well be the optimum time for you to refinance your business loan.
The foregoing information is provided by City National Bank (CNB). Unless otherwise stated, opinions expressed are those of the respective authors and not necessarily those of CNB. The information is provided without warranty and no recommendation or endorsement by CNB is intended or should be inferred unless specifically stated.
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