6 ways to refinance your commercial borrowing to save money
There might be times when you need to take a loan to make sure that your business is successful. However, as you borrow more, it can become more and more straining for the budget of your company. You might also start having a hard time keeping up to date with all the monthly payments and commitments. If you are trying to reduce your business expenses, it might be time to refinance your commercial borrowing. That way, you will be able to repay all the old loans and merge the payments into one. Here is how you can refinance your commercial borrowing to save money.
Look at your current financial situation
Before you proceed with any decision, you need to look at the current financial situation of your business. It is important that you review all your current loans. See how much you pay monthly to work out how you can get rid of your debts. To get a clear picture of your situation, you should also have a look at the annual percentage rate and how much longer you have left to clear the debts. Then, you should also have a look at your earnings and how profitable the business is. Once you have all the information in place, you will be able to determine if refinancing your business loans is something that you need.
Put together all the paperwork you might need
When you decide that refinancing is the right choice for you, it is time for you to start gathering all the paperwork that might be needed for the application process. One of the documents that you might need is the bank statements of your business. If possible, try to gather bank statements for the last twelve months. Then, you should prepare a balance sheet and detailed statements of profit and loss. Make sure that you also have your business VAT returns and a list of all your current business loans. Of course, you will need proof of identity. When you have all your documents ready, you can start to browse through the options available.
Have a look at all the options available
When it comes to business loans, there are many options on the market. The business loan interest rate in the UK can be anywhere between 3% and 72% per annum. Depending on the interest rate of your current loans, you might be able to find a refinancing option with a lower interest rate. You can find relevant advice online. An IFA is a professional who is qualified to offer financial advice and recommend financial products from the whole of the market. That means that they are not restricted to recommending products tied to any particular provider and can give advice based solely on client needs. Experts such as Prosperity Wealth can attest to this.
See if you are eligible to refinance your commercial borrowing
Before you proceed further with any option, you should have a look if you are eligible to refinance your commercial borrowing. Every lender and option will have different criteria that you need to fulfil in order to get approval on your application. Therefore, you should make sure that you read the criteria carefully in order to make the request successful. Understanding the requirements that you need to meet will make the process smoother, and you will not need to face any major obstacles. Some of the criteria the lenders may require are the length of your trading or the turnover of your business. Read all the information carefully and make the process easier for yourself.
Resolve your old business loans
Once you hand in the application and get approval, it is time to resolve your old business loans. Use the money you get from the refinancing process to clear all your current debt. Then, you will be paying only one instalment per month to the new lender. This way, it will be easier for you to stay on top of your debts and monthly payments. While it can be very convenient, you need to remember to pay your instalments on time to avoid any further fees or potential financial problems. With responsible behaviour, you will be able to keep your company successful and in business.
Learn about all the advantages and disadvantages that you should know
As it is with all financial products, even refinancing has its advantages and disadvantages. To make sure that you are making a good decision, it is essential that you learn everything you need to know about refinancing in advance. One of the most significant advantages of refinancing is that you can merge your business loans. Because of that, you will have only one monthly payment to send from your account. The process can also help you to spread out or shorten the period of repaying the amount of money you currently owe. However, there are also disadvantages. If you have a poor credit score, you might not get access to the lower interest rates. In that case, it might be more advantageous to stick to your current loans.
