What makes business debt “expensive”?
Price is only part of it. A friend in finance would look at four things:
- Repayment frequency. Daily or weekly deductions from a business account can strangle cash flow even when the total cost looks manageable.
- Term mismatch. Short-term money used for long-term things — like funding a fit-out with a facility due back in a few weeks — creates constant refinancing pressure.
- Stacking. One short-term loan is manageable. Three from different lenders, each taking a slice of every deposit, is not.
- Penalties and fees for missed payments, which snowball when cash is tight.
If two or more of those sound familiar, refinancing is worth a conversation.
How does refinancing actually work?
You take out one new loan, and the new lender (or your lawyer) pays out your existing debts directly. You’re left with one repayment, on one schedule, with one lender. For a business owner, the biggest benefit is usually breathing room: fewer deductions, a clearer picture, and time to focus on trading instead of juggling.
A simple example scenario
Example scenario — for illustration only. A Hamilton landscaping business has two short-term loans with weekly repayments, a business credit card at its limit and an overdue GST balance. The owners have equity in their home. A property-secured loan pays out all four, the card is closed, and the business moves to one monthly repayment. The total owed hasn’t magically shrunk — but the weekly pressure has gone, and they’ve got a plan.
What should I gather before refinancing?
- A list of every debt: lender, balance, repayment amount and frequency.
- Payout figures in writing, including any early repayment or break costs.
- Recent bank statements showing repayments going out.
- Property details if you’re using property as security — address, rough value and what’s owing.
With a property-secured loan, you don’t need financials or tax returns for the initial assessment. That’s often a relief for owners whose accounts fell behind while they were fighting fires.
When is refinancing a bad idea?
If the business is losing money every month, refinancing only makes the hole deeper and longer. Fix the leak first.
It’s also a poor idea if:
- the new loan simply extends the same total debt over a longer period with no real improvement in cash flow;
- you keep the old facilities open “just in case”;
- you’re refinancing unsecured debt onto your home without understanding the added risk to the property.
Our guide on the true cost of borrowing shows how to compare offers honestly without getting lost in numbers games.
What options do you match people with?
| Your situation | Often suits |
|---|---|
| Several debts, property with equity | Property-secured loan from $20,000 up to $1m, first or second mortgage |
| Smaller debts, solid turnover | Unsecured business loan based on turnover and bank statements |
| Debts plus IRD arrears | Property-secured loan that pays out IRD as well |
| Creditors open to a deal | Sometimes a negotiated arrangement, no new loan |
Every loan is priced on your individual circumstances. We’ll find the sharpest option available for your situation and show you clearly how it compares with what you’re paying now.
How LendFriend helps
Send us the list — even a rough one. We’ll look at your situation, tell you honestly whether refinancing helps, and if it does, match you with a lender from our panel that suits. You decide.
Start your enquiry. It takes about 60 seconds and won’t affect your credit score.
The honest bit
Consolidating only works if the old facilities get closed, not just cleared. If the cards and short-term lenders stay open, it's very easy to end up with the new loan and the old debts. We'll talk about that, because it's where refinancing most often goes wrong.