Refinance a Business Loan in Australia
Is your business loan starting to feel more like an anchor than a sail? You’re far from alone. According to the 2025 SME Growth Index, over 30% of Australian small and medium-sized businesses are planning to refinance or switch lenders this year, as competition among banks and non-bank lenders heats up.
With commercial lending rates averaging around 6.39-9% p.a., even a 1% reduction could save thousands in annual interest — freeing up cash for expansion, hiring, or debt reduction.
This guide is your strategic playbook to seize that opportunity. You’ll learn exactly how to refinance a business loan to cut costs, boost cash flow, and unlock growth capital — plus when to act, how the process works, and what to look for in your next lender.
Can You Refinance a Business Loan?
Yes, you can refinance business loans by replacing your current debt with a new one.
The funds from your new loan are used to pay off, or “discharge,” the old loan completely.
The goal isn’t just to swap loans. It’s to secure more favourable terms that better suit your business’s current situation and future goals.
This can be achieved in several ways. For instance, you could switch to a different product with your existing lender. Or, you may change your debt structure to better manage your finances.
A successful business loan refinance can significantly improve your financial position.
Switching Lenders
This involves moving your loan from your current bank or financial institution. You switch to a new lender that offers you a better deal.
They could also offer features your current loan lacks. This gives you a compelling reason to make the switch and improve your loan conditions.
Switching is one of the most common forms of refinancing.
Changing Loan Products
You don’t always have to leave your current lender to refinance. Sometimes, the best option is right where you are.
This strategy involves staying with your existing lender but moving to a different loan product.
For example, you could switch to a loan with a lower interest rate or more flexible repayment options, achieving your goals without the hassle of changing banks.
Changing Your Debt Structure
Refinancing can also mean altering the fundamental structure of your debt. This is about optimising how your finances are organised.
For instance, you can consolidate several smaller business debts into a single, larger loan to simplify payments.
Alternatively, you could increase your total borrowing facility to fund an expansion project, all under one new, streamlined loan agreement.
It’s a powerful way to make your debt work better for you.
👉 Check out the other Types of Refinancing in Australia.
Refinance Business Loan Eligibility
Securing approval for a business loan refinance requires convincing a lender that you’re a reliable borrower.
Success hinges on meeting their eligibility criteria. While specifics vary, all lenders assess a common set of factors.
Preparing for this scrutiny can significantly increase your chances of getting approved. Key criteria that lenders assess include:
- Business History: Most lenders require a minimum trading history, typically 6-12 months for online lenders and 2+ years for traditional banks.
- Financial Health: Lenders will analyse your financial statements to verify consistent revenue, profitability, and the capacity to service the new loan.
- Credit History: A clean credit file for both the business and its directors is paramount, especially for major banks.
- Security/Collateral: For secured loans, the asset’s value is key. Lenders prefer a Loan-to-Value Ratio (LVR) of 80% or lower.
- Director’s Personal Guarantee: It’s standard practice to require a personal guarantee from directors, making them personally liable if the business defaults.
👉 Also see: Am I Eligible for Refinancing?
Document Checklist for Refinancing Your Business Loan
A well-prepared application package creates a professional impression and prevents delays. Having all your documents ready will streamline the process.
Use this checklist to gather the most commonly requested documents for a small business loan refinance.
| Document Category | Specific Items | Why It's Needed |
|---|---|---|
Personal & Director Info |
| To verify identities and understand the personal financial strength of the guarantors. |
Business Info & Financials |
| To assess the business’s historical and current financial performance, profitability, and cash flow. |
Existing Loan Details |
| To verify the details of the existing debt and check for a history of on-time payments. |
Security Details (for secured loans) |
| To verify ownership, location, and legal details of the asset being offered as collateral. |
👉 Also see: Documents Required for Refinancing in Australia
How to Refinance Your Business Loan
The business loan refinancing process can seem complex, but it follows a logical path. This guide breaks it down into clear, manageable steps.
Following a structured framework helps you move from an initial idea to a confident, data-backed decision. It helps ensure due diligence at every stage.
1. Define Your "Why" and Set Clear Goals
Before looking at interest rates, define your motivation. What specific problem are you trying to solve with your refinancing business loan?
Without a clear goal, you can’t properly evaluate your options. Are you aiming to:
- Reduce monthly payments?
- Free up capital for growth?
- Release personal assets from security?
Your primary goal will act as a compass, helping you measure every potential offer and preventing you from getting distracted by irrelevant features.
2. Conduct a Financial Health Check
Next, review your business’s current financial standing. Lenders will scrutinise this information closely. You need to have a clear picture of it yourself.
Start by reviewing your current loan contract to understand its terms, rate, and any prepayment penalties.
Then, gather your key financial documents, like profit and loss statements and balance sheets, for the last two years.
Finally, check both your business and personal credit reports to ensure they are clean and accurate.
3. The Break-Even Analysis
A lower interest rate is appealing, but only if the savings outweigh the costs of switching. The break-even analysis provides the answer.
First, add up all the potential upfront costs to refinance, including exit and establishment fees.
Next, calculate your estimated monthly savings by comparing your current and new repayments.
To find the break-even point, divide the total costs by the monthly savings. This tells you how many months it will take to recoup the costs.
For example, if your total refinancing costs are $4,000 and you save $200 per month, your break-even point is 20 months ($4,000 / $200).
A shorter break-even period (e.g., under 24 months) represents a safer and more compelling case for refinancing.
4. Talk to Your Current Lender First
Before you apply elsewhere, always talk to your current bank. This simple step can sometimes deliver the best result with the least hassle.
Inform them you’re considering your options and present the competitive offers you’ve researched.
Faced with losing a good customer, many lenders will be motivated to negotiate and may offer a rate reduction or waive fees to keep your business.
This often achieves your goals without the cost and disruption of changing institutions.
5. Gather Your Documents and Submit Your Application
Lenders require a comprehensive set of documents. This is often time-consuming, so being organised here will significantly speed things up.
You’ll need to gather personal and director information, business financials, and details of your existing loan.
Once you have all the paperwork ready, complete the lender’s application form accurately and submit it through their preferred channel.
6. Navigate Loan Approval and Settlement
This is the final phase where the new loan is approved and activated.
The new lender will conduct a detailed assessment and order a property valuation if the loan is secured. If successful, you’ll receive a formal loan offer.
At settlement, your new lender provides the funds to pay out your old loan in full. Your new mortgage is registered, and your new loan officially begins.
You will then start making repayments according to your new contract.
👉 You can also check out How to Refinance a Home Loan in Australia the smart way.
AU Expats—Want to Refinance from Overseas?
- Being an Australian expat adds unique hurdles, and you may worry you can’t get the best deal on your business or home loan.
- Odin Mortgage is your specialist on the ground. We make it seamless for expats to refinance for maximum savings. Let us handle the complexity and find you a better deal today.
- Check your refinance eligibility today
When Is the Best Time to Refinance a Business Loan?
The perfect time to refinance business loans is when your business’s strong performance aligns with favourable market conditions.
This creates a “borrower’s market,” where you can negotiate from a position of strength.
Acting at this intersection allows you to maximise your leverage with lenders. This optimal timing is usually signalled by a combination of triggers from both the market and your own business.
Market-Driven Triggers
External economic factors can create prime refinancing opportunities. These are market shifts that work in your favour.
Keep an eye on interest rate movements and lender competition.
When the Reserve Bank of Australia (RBA) lowers the official cash rate, lenders often reduce their own rates to stay competitive. This is a great time to shop around.
Additionally, when lenders are fighting hard for new customers, they may offer aggressive rates, waive fees, or even provide cashback incentives.
Business-Driven Triggers
Your own business’s success is a powerful catalyst for refinancing. A stronger financial position makes you a more attractive borrower.
Several internal milestones can signal it’s time to act. These triggers include:
- Improved Performance: If your revenue and profitability have grown, you represent a lower risk to lenders, which can unlock better terms.
- End of a Fixed-Rate Term: Before your loan switches to a higher standard variable rate, proactively seek refinancing options to avoid this costly outcome.
- Growth and Expansion Needs: When you need more capital for growth, you can refinance to improve existing terms and increase your total borrowing facility.
- Outgrowing Your Loan: If your current loan has become restrictive or lacks the features a mature business needs, it’s a clear sign that it’s time for an upgrade.
👉 Also check out: When to Refinance Your Mortgage in Australia
A Complete Breakdown of Business Refinancing Fees
Successful business loan refinancing relies on a careful cost-benefit analysis. Look beyond the headline interest rate and account for all fees.
Overlooking these costs can wipe out any potential savings. Here is a checklist of potential costs to consider.
| Fee Type | Who Charges It? | Description | Pro Tip |
|---|---|---|---|
Fixed-Rate Break Cost | Current Lender | A penalty for exiting a fixed-rate loan early. This can be a very significant cost. | Crucial: Get a formal, written quote from your current lender. This fee can make refinancing unviable. |
Discharge Fee | Current Lender | An admin fee to close your old loan account and release the mortgage security. | This is a standard exit cost. Check your original loan contract for the exact amount. |
Application/Establishment Fee | New Lender | A one-off fee to process your application and set up the new loan. | This fee is often negotiable or waived by lenders as part of a promotional offer. Always ask. |
Valuation Fee | New Lender | The cost to have a professional valuer assess the market value of the security property. | Some lenders may waive this fee, especially for standard residential properties. Confirm this upfront. |
Lenders Mortgage Insurance (LMI) | New Lender / Insurer | An insurance premium payable if your Loan-to-Value Ratio (LVR) is over 80%. It protects the lender, not you. | The best way to avoid LMI is to ensure your loan is 80% or less of the property’s value. |
When you refinance a secured business loan, you must also pay government fees. These are for registering the new mortgage and discharging the old one.
These statutory fees are collected by your new lender at settlement and vary by state. Here are the indicative fees for registering or discharging a mortgage across Australia.
| State / Territory | Mortgage Registration / Discharge Fee (per transaction) |
|---|---|
New South Wales | $175.70 |
Victoria | $125.70 (via PEXA) |
Queensland | $238.14 |
South Australia | $198.00 |
Western Australia | $216.60 |
Tasmania | $163.30 (Registration), $202.46 (Discharge) |
Australian Capital Territory | $178.00 |
Northern Territory | $176.00 |
All fees are indicative and subject to change. It’s recommended to confirm the current fees with the relevant state or territory government body.
👉 Also see: How Much Does It Cost to Refinance a Home Loan?
Tax and Risk Considerations
A smart refinancing strategy goes beyond just lenders and rates. You must also understand the associated risk and tax implications.
These “fine print” details can significantly impact the overall cost of your refinance.
It’s important to know that stamp duty is generally not applicable for a straightforward loan refinance where property ownership doesn’t change.
Tax Deductions for Refinancing Costs
Many of the costs you incur when you refinance business loans are tax-deductible.
The Australian Taxation Office (ATO) calls these “borrowing expenses.” They include application fees, valuation fees, LMI premiums, and government charges.
It’s crucial to understand how to claim these deductions.
According to the ATO, if your total borrowing expenses are more than $100, you can’t claim them all at once. Instead, the deduction must be spread out (amortised) over the shorter of the loan’s term or 5 years.
Interest paid on the loan is also typically deductible, provided the funds are used for the business.
Given the complexities, we highly recommend you consult with a qualified accountant or tax advisor to ensure you’re correctly claiming all eligible deductions.
👉 ODIN Tax’s registered tax agents can assist Australian expats with their Australian tax obligations.
Potential Risks to Consider
Before committing to a new business loan, think about what could go wrong. The risks can range from market shifts to contractual fine print.
A common pitfall is increasing the total cost by extending the loan term. It lowers monthly repayments, but you pay more interest over the life of the loan.
Furthermore, every loan application creates a “hard inquiry” on your credit report, and too many in a short time can lower your score.
Finally, don’t underestimate the value of a good relationship with your current lender, who may be more supportive during tough times than a new institution.
Being aware of these helps you make a smarter choice.
👉 Check out: 10 Reasons Not to Refinance Your Mortgage
Choosing Banks vs Online Lenders
The Australian lending market is diverse. Choosing the right business loan refinancing partner is as crucial as the decision to refinance itself.
The market can be broadly split into traditional banks and specialist non-bank lenders, including online fintechs.
Understanding their core differences is key to selecting the right fit for your needs.
| Feature | Major Banks (e.g., NAB, CommBank) | Non-Bank / Online Lenders (e.g., Prospa, Lumi) |
|---|---|---|
Interest Rates | Lower (most competitive) | Higher |
Approval Speed | Slow (2-6 weeks or more) | Fast (24-48 hours) |
Lending Criteria | Strict (strong credit, 2+ years history, profitable) | Flexible (newer businesses, lower credit scores accepted) |
Documentation | Extensive (full financials, tax returns, BAS) | Minimal (bank statements, low-doc/no-doc options) |
Security Requirement | Often require property security | Unsecured options available |
Ideal Borrower | An established, profitable business with property that prioritises low cost. | A business that needs funds quickly, doesn’t meet bank criteria, or prefers not to use property security. |
Learn more about the big four banks vs non-bank and online lenders below.
The Big Four Banks
These are the traditional pillars of Australian finance. They are reliable and typically offer the most competitive interest rates.
However, their application process is known for being slow and requiring extensive documentation, with very strict credit requirements.
A major bank is ideal for an established, profitable business with a clean credit history and property to use as security. This borrower is usually not in a hurry and wants to secure the lowest possible interest rate.
Non-Bank & Online Lenders
This diverse group includes specialist and online lenders. Their biggest advantage is speed and convenience.
They use technology to provide funding within 24-48 hours.
These lenders have more flexible criteria and are often willing to lend to newer businesses or those with imperfect credit.
This flexibility comes at a price, as their interest rates and fees are almost always higher than banks to compensate for the greater risk.
They are perfect for businesses that prioritise speed and access to capital over cost.
The best choice depends on whether your business prioritises the lowest cost, the fastest speed, or the most flexible criteria.
Refinancing Benefits for Your Business
Thinking of business loan refinancing as just a cost-cutting move is missing the bigger picture. For a strategic business owner, it’s a proactive power move.
Refinancing can unlock a wide range of benefits that go far beyond just a better interest rate. It can greatly impact business growth and stability.
The advantages range from direct cost savings and improved cash flow to reduced personal risk and greater strategic flexibility.
| Benefit Category | Specific Action | Tangible Business Impact |
|---|---|---|
Cost Savings | Secure a lower interest rate | Reduces monthly overheads, increases net profit, and improves overall financial performance. |
Cash Flow Improvement | Extend the loan term or consolidate debts | Lowers the total monthly repayment amount, freeing up working capital for reinvestment in growth activities like marketing, inventory, or staffing. |
Strategic Capital | Access equity from business or personal assets | Provides a significant capital injection to fund major expansion, acquire new equipment, or buy out a competitor without liquidating assets. |
Risk Reduction | Release personal assets (e.g., family home) from the loan security | Protects the owner’s personal wealth and assets from business-related financial risks, creating a clear separation between personal and business liabilities. |
Enhanced Flexibility | Switch to a loan with modern features (e.g., offset, redraw) | Provides greater control over finances. An offset account can reduce interest costs, while a redraw facility offers a safety net to access extra funds if needed. |
Structural Optimisation | Shorten the loan term or switch from variable to fixed rate | Allows the business to pay off debt faster, saving significant interest costs in the long run, or provides certainty over repayments during periods of economic volatility. |
These are discussed in more detail below.
Lower Your Interest Rate and Repayments
A lower interest rate directly cuts your monthly repayments. This simple change boosts your profitability every single month.
In a competitive market, lenders frequently offer rates that are lower than what you may be paying. This is especially true if your loan is several years old.
Securing a better rate through a small business loan refinancing can have a significant positive effect on your bottom line.
👉 Also see: How To Lower Your Mortgage Payment Without Refinancing
Improve Your Business Cash Flow
Lower loan repayments mean more cash stays in your business. This isn’t just a number on a spreadsheet. It’s your growth engine.
That extra capital is now free for you to reinvest or use in mission-critical activities, such as:
- Hiring new talent
- Launching a marketing campaign
- Increasing your inventory to meet customer demand
Over time, this enhanced cash flow can change the entire trajectory of your business.
Access Equity for Growth Projects
As you pay down your loan or the value of your assets grows, you build equity. Refinancing allows you to access or “cash out” this equity.
It’s a way to unlock capital without taking on a separate new loan. You can use it for major projects, such as:
- Funding an expansion
- Purchasing new equipment
- Acquiring a competitor
It gives you the financial firepower to make strategic investments that drive your business forward.
Release Personal Assets as Security
Startups often have to secure their first loans with personal assets, like the family home. This puts your personal wealth at risk.
As your business grows and builds its own track record, you can refinance business loans to remove this personal security.
You can switch to an unsecured loan or one secured by business assets instead. This move decouples your personal finances from your business, significantly reducing your personal risk.
FAQs about Refinancing Business Loans
Here are quick, clear answers to some of the most common questions Australian business owners have about refinancing.
How long does it take to refinance a business loan in Australia?
The timeline varies. With a major bank, expect it to take 2-6 weeks or even longer due to their thorough processes.
With a non-bank or online lender, it can be much faster, often with approval and funding within 24-48 hours.
Can I refinance a business loan with bad credit?
Yes, it’s possible, but your options will be limited. Major banks are unlikely to approve an application with a poor credit history.
However, specialist non-bank and online lenders are far more flexible, often focusing more on your recent business cash flow than your credit score.
Be prepared to pay a higher interest rate to compensate for the added risk.
Will refinancing my business loan affect my credit score?
Yes, but the impact is usually minor and temporary.
When you apply, the lender performs a “hard inquiry” on your credit file, which can cause a small, temporary dip in your score.
Applying with multiple lenders in a short period can have a greater negative effect. In the long run, making on-time repayments on your new loan can actually help improve your credit score.
How soon can I refinance a business loan?
There is no mandated waiting period. However, if your current loan has a fixed rate, it’s usually best to wait until its term expires to avoid break costs.
Most lenders also prefer to see a track record of at least 1-2 years of stable trading and on-time repayments before they will consider refinancing it.
When done for the right reasons and at the right time, refinancing can unlock significant value. It can provide the financial flexibility needed to adapt, grow, and protect the personal wealth you’ve worked so hard to build.
AU Expats—Leverage the Specialists to Maximise Your Savings
- Beyond your business loan, an uncompetitive home loan could be draining your wealth, and you need a trusted partner for your long-term property journey.
- Odin Mortgage is that partner. We specialise in refinancing home loans for expats and provide steady support for all your future property goals.
- Get tailored refinancing advice today
Key Takeaways
- You can replace your current business loan with a new one to secure more favourable terms. ⬆️
- Lenders assess your business history, financial health, and credit score to determine your refinancing eligibility. ⬆️
- You will need personal, business financial, existing loan, and security documents for your application. ⬆️
- The process involves defining goals, analysing costs, talking to lenders, and submitting a formal application. ⬆️
- The best time to refinance is when your business is performing well amid favourable market conditions. ⬆️
- Business loan refinance costs include exit fees from your old lender and establishment fees for the new loan. ⬆️
- Understand the tax-deductible expenses and potential risks before you commit to refinancing your business loan. ⬆️
- Banks offer lower rates but are slow, while online lenders are faster but more expensive. ⬆️
- Major benefits include lower repayments, improved cash flow, accessing equity, and reducing personal risk. ⬆️
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