Refinancing business debt so the repayments make sense again

Debt tends to pile up in layers. A short-term loan to cover a slow month, then another. An equipment lease. A credit card used for supplier payments. A GST balance that slipped. Each one made sense on its own, but together the repayments now take too much of every week’s takings. Refinancing pulls those layers into one, with a structure the business can actually carry.

Signs refinancing could help

• Several lenders debiting the account every day or week.
• Repayments that leave too little for wages, stock or tax.
• IRD arrears growing with penalties and interest.
• A short-term loan due soon with no clear way to repay it.
• Equity in property that isn’t being used, while unsecured debt costs a lot.
• A bank that is reducing its exposure or won’t extend.

How a consolidation refinance works

1. List every debt. Lender, balance, repayment, frequency, remaining term and any break fee.
2. Get payout figures. Each lender confirms the amount needed to close the loan on a set date.
3. Size the new loan. Enough to pay everything out, plus fees, and ideally a small buffer.
4. Settle. The new lender pays each creditor directly on settlement day.
5. One repayment. The business now has one lender and one schedule.

The biggest improvements usually come when expensive unsecured debt is replaced with a loan secured over property, which costs less per dollar and can run for longer.

Total cost, not just the repayment

Lower repayments are the headline benefit, but they’re not the whole story. Stretching a debt from 12 months to five years reduces each payment but can increase the total paid. To compare fairly:

• Add up the total you’d pay on your current debts if you kept them.
• Add up the total you’d pay on the new loan, including establishment and legal fees.
• Include any break fees on the old loans.
• Consider the cost of not refinancing: IRD penalties, missed supplier discounts, stress on cash flow.

If refinancing only makes sense because it pushes the problem further away, talk to your accountant about the underlying profitability first.

Refinancing with property

Using property makes the largest refinances possible:

• A first mortgage can pay out the existing bank loan and the business debts together.
• A second mortgage can sit behind the bank loan and clear only the business debts.
• Commercial property finance can release equity from business premises.

Up to $5m is possible within 24–48 hours once valuation, payout figures and documents are ready. The slowest step is often waiting for existing lenders to provide payout figures, so ask for them early.

Refinancing without property

Without property, consolidation is possible but more limited. An unsecured lender may refinance a couple of smaller loans into one larger one with a longer term, if bank statements show the business can carry it. Expect lower amounts and higher costs than a property-secured refinance.

An illustrative example

A Hamilton transport company has three short-term unsecured loans with daily repayments, an overdue IRD balance of $55,000, and two truck finance contracts. Total weekly repayments are about $9,800, which leaves almost nothing for fuel price spikes or a slow week.

The owners’ home has substantial equity. A second mortgage of $290,000 over three years pays out the three short-term loans and IRD in full. The truck finance stays in place. Weekly outgoings on the consolidated debt fall to about $2,600. The owners compared total cost before and after: slightly higher in interest over the longer term, but no daily debits, no IRD penalties and enough cash flow to keep the trucks running.

Before you sign

• Get written payout figures from every current lender.
• Ask for the new loan’s total cost in dollars.
• Make sure the term is realistic for what’s being refinanced.
• Close paid-out accounts so they don’t get drawn again.
• Set up a separate account for GST and PAYE if tax was part of the problem.

Find your fastest route

The funding speed finder shows whether property-backed or unsecured refinancing is realistic for your timing.

Keep the old accounts closed

After a consolidation, ask each paid-out lender to confirm the account is closed and any security released. Leaving old facilities open makes it easy to slip back into the same position.

Talk it through

Asking what’s possible doesn’t touch your credit file, and we don’t fire your details off to a list of lenders. A real person reads your enquiry, maps every debt with you and calls with a plan that genuinely improves the position. Start your enquiry.