Refinance a Business Loan: Broker Assessment Guide

To refinance a business loan, show that the replacement improves the client’s cost or structure, prove repayment capacity and arrange payout of the existing facility. A lower repayment alone doesn’t establish a saving. Your assessment needs the remaining debt, exit costs and security release terms before you recommend a switch.

When a Business Loan Refinance Makes Sense

Refinancing is useful when the new facility solves a defined problem at an acceptable cost. Record what the client wants to change before choosing a lender.

• Reduce the remaining interest and fees after paying the costs of switching.
• Change the term or repayment frequency to match the business’s cash flow.
• Release property or business assets from the outgoing lender’s security.
• Consolidate facilities into a payment the business can sustain.
• Replace a facility that no longer fits, such as short-term funding used for a long-lived business investment.

When you refinance a short-term business loan, separate temporary cash-flow pressure from an ongoing trading loss. A longer term can reduce immediate payments while leaving the business in debt for longer. Model the next slow trading period before treating the lower payment as affordable.

Renegotiating with the current lender is a useful first step when pricing or repayment timing is the main problem. Obtain its written retention proposal and compare it with the incoming offer, including any restructure fees. Staying can avoid discharge work and new security costs when the existing facility already suits the business.

For a commercial loan refinance secured by business premises, include the property in the assessment. To refinance commercial property, the file needs the proposed lender’s valuation and security requirements, plus evidence of rent or business income supporting repayments. A property-backed loan still needs a workable repayment source.

Payout, Break Costs and Security Release

Obtain a written payout estimate and a complete security schedule before calculating the benefit of switching. A statement balance alone doesn’t show the amount needed to close the loan on settlement day.

Record the principal outstanding, interest accrued to the proposed payout date, fixed-rate break costs and any early-repayment or discharge fees. Check the payout quote’s expiry and daily interest adjustment. Keep an indicative quote for assessment separate from the final settlement figure.

As at October 2026, National Australia Bank (NAB) lists economic costs for its business lending facilities. Its business fee guidance describes these as its estimated loss from early termination or prepayment. Request the facility-specific figure before assuming that a cheaper replacement will save money.

A general security agreement (GSA) can cover a business’s personal property, including equipment and receivables. Identify the borrowing entity, assets covered and registrations on the Personal Property Securities Register (PPSR). Also identify property mortgages, guarantees and any other facilities secured by the same assets.

Repaying one loan doesn’t establish that every security or guarantee will be released. If the security supports another debt, the outgoing lender needs to agree which assets it will release. The incoming lender’s required priority can depend on that agreement, so resolve it before setting an unconditional settlement date.

The PPSR discharge guidance requires the secured party to end a registration when its security interest ends. Obtain the release undertaking needed for settlement and retain the discharge evidence afterwards. Property security requires a separate mortgage discharge coordinated by the lenders and settlement representatives.

If a release remains outstanding, identify the debt or document preventing it. Arrange the agreed payout and release conditions before drawing the replacement loan. Allow for valuation, legal documents and discharge processing in the settlement timetable.

Evidence the Incoming Lender Assesses

Build the incoming lender’s evidence file around current trading performance and the business’s ability to meet the replacement repayments. Reduced-documentation assessment changes the evidence route, but the lender still assesses credit risk.

Gather annual financial statements and tax returns, recent business activity statements (BAS), business bank statements and existing facility statements. Record when the business began trading and explain changes in ownership or operations. Include current management accounts and a cash-flow forecast when the last annual accounts don’t show today’s position.

As at October 2026, NAB’s business finance checklist says most businesses need two years of annual financial statements. It also requests the latest full tax portal report and can require additional cash-flow or management information. Directors or shareholders can need personal financial evidence as well.

As at October 2026, Prospa’s business lending requirements list Small Business Loan eligibility from six months’ trading with $6,000 monthly turnover. For applications up to $250,000, it requests six months of bank statements, with tax portal access above $100,000.

Loans above $250,000 require twelve months of statements, tax portal access and financial statements. These are Prospa’s product requirements, not a universal business-loan checklist or a refinance approval.

When a Low Doc Route Fits

Some established facilities qualify for reduced financial evidence when repayment history meets the lender’s rules. Keep that eligibility separate from an application seeking extra cash or consolidating additional debts.

As at October 2026, Australia and New Zealand Banking Group (ANZ) advertises rapid refinance for eligible business lending with total ANZ business borrowings below $1.5 million. It requires twelve months of statements showing the minimum repayment and no late repayments. Provide separate evidence of the minimum repayment if the statements omit it.

The existing facility must have been established for at least twelve months. Proposed repayments must be no higher than current repayments, and the application must refinance an existing facility only. A credit check and ANZ’s remaining-term and asset-age requirements also apply.

Its business loan terms retain those conditions even when reduced paperwork is available.

Recent arrears therefore remove a file from that rapid-refinance route. Prepare a full explanation of the missed payments, their cause and subsequent repayment conduct for lenders assessing the file through another route. If repayments remain unaffordable, discuss hardship or restructuring with the existing lender while assessing the options.

Disclose Australian Taxation Office (ATO) debt before selecting the incoming lender. Include the balance, payment-plan terms, payments made and whether the proposal clears the debt or leaves it outstanding. Shortlist facilities that permit that position and include continuing tax payments in the affordability calculation.

The ATO’s payment-plan guidance explains that interest continues and new tax obligations still fall due. A tax payment plan isn’t evidence that the business can also afford a replacement loan. For the documentation routes, use the low doc and no doc business loans guide.

Test the Saving and Structure

Compare future cash outgoings from the same assessment date under the current facility and each proposed replacement. Use the same debt amount for the initial comparison. Separate extra borrowing from refinancing so added cash doesn’t distort the saving.

Include all remaining repayments, any balloon payment and recurring fees. Add break costs, discharge charges and incoming establishment, valuation or legal costs to the replacement option. Fees financed into the new loan also incur interest, so use the lender’s repayment schedule for the actual amount advanced.

Fictional Business Example

Harbour Catering is a fictional business with $100,000 principal outstanding and 36 monthly repayments left. Every payment below is an assumed cash amount, not a published rate or lender offer. All figures are Australian dollars and include any applicable tax on assumed fees.

Assume its payout is $101,500: $100,000 principal, $1,200 break costs and a $300 discharge fee. Incoming fees are $900. The business pays all $2,400 of switching costs from its cash, so each replacement borrows only $100,000.

Future cash outgoing	Keep current loan	Refinance over 36 months	Refinance over 60 months
Monthly repayment	$3,400	$3,200	$2,200
Number of payments	36	36	60
Total scheduled repayments	$122,400	$115,200	$132,000
Switching costs paid separately	$0	$2,400	$2,400
Total future cash paid	$122,400	$117,600	$134,400
Cost above $100,000 principal	$22,400	$17,600	$34,400

Assume every option fully repays principal, with no balloon, recurring fees or later rate changes. The 36-month replacement saves $4,800 after switching costs. Its $200 monthly reduction recovers the $2,400 upfront cost in twelve months under these assumptions.

The 60-month replacement cuts the monthly payment by $1,200 but costs $12,000 more than keeping the current loan. Record that difference in the client file alongside the reason for accepting a longer term.

Cash-flow relief and total-cost savings are different outcomes.

Compare security and guarantees alongside the figures. Moving from an unsecured facility to property security puts that property at risk even if payments fall.

Use the unsecured business loan guide to assess that structure separately. If the debt is a business vehicle loan, the car loan refinance guide covers that assessment.

Sequence Approval and Settlement

Arrange approval and security release before the replacement funds are used to close the outgoing loan. The aim is one coordinated payout, with the old facility closed and the replacement operating on the agreed terms.

1. Submit the chosen application with the financial evidence, existing facility details and security schedule. Identify exactly which debts the incoming funds must repay.
2. Obtain written approval and clear the drawdown conditions. Confirm that the approved amount plus the client’s cash covers payout and fees.
3. Submit the outgoing lender’s discharge or release request once the approval provides a workable settlement route. Obtain a final payout figure valid for the agreed settlement date.
4. Coordinate documents and funds with both lenders and the settlement representatives. Agree who pays the outgoing lender and who supplies each security release.
5. Draw and apply the replacement funds through the agreed settlement process. Keep existing repayments funded until the outgoing lender confirms payout, so a delay doesn’t create arrears.
6. Verify completion against the closing records. The outgoing balance must be cleared, the intended facility closed and each agreed security release evidenced. Check the new opening balance and first repayment date against the approved schedule.

If settlement moves beyond the payout quote’s validity, obtain an updated figure and reconcile any shortfall before drawing funds. If the outgoing facility remains open after payment, obtain its closing statement and resolve residual interest or fees.

Cancel its repayment instruction only after closure is confirmed, then retain the payout and release evidence with the client’s signed cost comparison.