Quick answer
Refinancing a business loan means replacing it with a new loan, usually to cut total cost, extend the term, release equity or move on when the current lender won't renew. It's worth doing when the saving or the cash flow benefit outweighs switching costs such as break costs, discharge and legal fees. Start three to four months before the term ends, because valuations and approvals take time.
Key points
- Most business loans have a term or review date, and that date, not the interest, often forces the refinance
- Under the Banking Code, a bank must give a small business at least 3 months' notice if it won't extend a loan that isn't fully repaid by the end of its term
- Break costs on fixed loans, discharge fees, valuations and legal costs can eat a saving, so price them before you switch
- Refinancing from a short-term private loan back to a bank is a common and healthy move once the reason for the private loan has passed
People tend to think of refinancing as rate shopping. For business loans, that’s often the least of it. A business loan usually comes with a term that ends, a fixed period that expires or a review the bank can use to change the deal. When one of those dates arrives, you refinance whether you went looking for a better offer or not. Owners who handle it smoothly simply spotted the date early.
What usually triggers a business refinance?
| Trigger | What’s happening | How urgent |
|---|---|---|
| The loan term is ending | Many commercial loans run three to five years with a large balance still owing at the end | Fixed deadline; start months ahead |
| A fixed period is finishing | The loan rolls to a new price you didn’t negotiate | Moderate; compare before it rolls |
| The lender won’t renew | The bank declines to extend, wants a lower amount or more security | High; notice periods matter |
| A covenant has been breached | Profit, interest cover or reporting fell short of the loan’s conditions | Varies; the lender may tolerate it or not |
| A better deal or more money is needed | Equity has grown, the business has improved, or you need to borrow extra | Your choice of timing |
There’s one more, and it’s a good one: graduating from short-term money. If you took a private or caveat loan to clear a tax debt or meet a deadline, the plan was always to replace it. Once tax returns are lodged and the statements look steady again, refinancing to a longer, cheaper loan is the exit. Our page on refinancing expensive short-term business debt covers that path in detail.
What does the Banking Code say if your bank won’t extend?
The Banking Code of Practice has been adopted by most Australian banks, and the 2025 edition applies to a wider group of small businesses than earlier versions. Two provisions matter most here.
First, if your loan isn’t designed to be fully repaid by regular repayments by the end of the term (which describes many interest-only and part-amortising commercial loans), and you’re not in default, the bank has to tell you of a decision not to extend at least 3 months before the loan must be repaid in full. Second, the Code makes clear that if a bank does extend or refinance, it isn’t obliged to keep the same terms.
In plain terms: three months’ notice gives you a window, not a solution. That’s roughly the time a property-secured refinance takes when everything goes smoothly. If you receive that letter, start the same week. Non-bank lenders aren’t bound by the Banking Code, so check the term and review clauses in their contracts before you sign.
Small business loan contracts also fall under the unfair contract terms laws, which since November 2023 have carried civil penalties. That doesn’t stop a lender declining to renew, but it does mean one-sided clauses in standard form loan contracts can be challenged.
The switching costs to price in
A refinance can look like a clear saving until the exit and entry costs are added. List them all:
- Break costs, if you’re leaving a fixed-rate loan early. These can be substantial when market rates have fallen since you fixed. Our break costs glossary entry explains how they’re worked out.
- Discharge fee from the outgoing lender.
- Land registry fees to discharge the old mortgage and register the new one, which vary by state.
- Valuation, usually ordered and charged by the new lender.
- Legal costs, often for both lenders’ solicitors.
- Establishment fee on the new loan.
- Re-registering security, such as a new general security agreement on the PPSR.
Add them up and divide by the expected saving per year. If it takes most of the new loan’s term to recover the cost, the refinance only makes sense for other reasons, such as a longer term, more funds or escaping a lender that’s about to call the loan in. Comparing in dollars is easiest with the loan cost comparison calculator.
Got a loan expiry or renewal letter on your desk? Give us the details and we’ll talk through what’s realistic before the deadline. One minute, and no credit check involved.
Bank, non-bank or private: where should the refinance go?
Stay with, or move to, a bank if your financials are up to date, profit comfortably covers repayments, and there are no recent arrears or tax debts. Banks are usually the cheapest long-term home for a business loan, and a competing bank may well want your business. It’s always worth asking your current bank to sharpen its offer before you move.
Consider a non-bank lender if the bank wants more than you can show: two years of strong financials, a lower loan-to-value ratio, or a tidier tax position. Non-banks can accept alternative documents and more varied security, at a higher total cost.
Use a private lender as a bridge if time is the problem. A short-term private refinance can repay a bank that’s calling in a loan, giving you six to twelve months to fix what concerned it and then refinance back. Our bank vs non-bank lender comparison sets out the differences side by side.
How to run a refinance without drama
- Diarise the dates. Term end, fixed period end and annual review. Set a reminder four months before each.
- Get your paperwork current. Latest tax returns, financial statements, BAS, an aged debtors list and a statement of all your debts. Lenders refinance current businesses, not last year’s.
- Ask the incumbent first. Tell your bank you’re considering options and ask what it can offer. Sometimes that’s enough.
- Request a payout figure and break cost estimate in writing, so you know the real cost of leaving.
- Compare offers on total dollars, including fees, over the period you’ll hold the loan.
- Allow for valuation risk. If the property values lower than expected, the loan amount may shrink.
- Settle before the deadline. A refinance that settles a week late can trigger default interest or a costly short extension.
Worked example: a Newcastle engineering workshop
This is an illustration only. Aisha owns an engineering workshop in Newcastle and the industrial building it runs from. Her bank loan of $1.1m, secured on the building, was written on a five-year term with a large balance due at the end. Four months before expiry, the bank writes to say it won’t extend, citing two weaker years after a major customer left.
Aisha starts immediately. Her accountant updates the financials, which show the business has recovered: the last twelve months are profitable again, but the two-year average still looks thin to a bank.
A non-bank lender values the building at $2.4m and offers a two-year interest-only refinance of $1.15m, enough to repay the bank, cover its own costs and the registry fees, and leave a small buffer. There are no break costs because the bank loan was variable. Total switching costs come to about $24k. The total cost of the new loan over two years is higher than her old bank loan, but far lower than the alternative: a forced sale of the building.
Aisha plans to approach a bank again once she has two clean years of financials, using the non-bank loan as a bridge back.
Refinancing on your terms, not your lender’s
The best refinances happen early, with a clear picture of what the business can borrow and what leaving will cost. We help owners refinance every week, including those whose bank has said it won’t extend and those climbing out of short-term debt back towards a bank.
The enquiry is a one-minute form, and making it leaves no mark on your credit file. Nobody shops your file around the market; a specialist from one team looks at the loan, the deadline and the security, then calls you. Be accurate about the balance, the expiry date and the property, which helps us recommend the path with the best chance of approval from the outset.
Frequently asked questions
When should I start refinancing a business loan?
Ideally three to four months before your loan's term or fixed period ends. That leaves time for a valuation, updated financials, approval and settlement without being rushed into an expensive extension.
What does it cost to refinance a business loan?
Common costs include the new lender's establishment fee, a valuation, legal costs for both lenders, discharge and registration fees at the land registry, and break costs if you're leaving a fixed-rate loan early. Ask both lenders for their figures in writing.
My bank won't renew my loan. What can I do?
Ask the bank why, and whether a smaller amount or a shorter extension is possible. If not, non-bank and private lenders refinance business loans regularly, often for a term long enough to fix whatever concerned the bank, after which you may be able to return to a bank.
Will refinancing affect my credit file?
A new application usually involves a credit enquiry. One well-planned refinance is unlikely to cause problems. Lots of applications in a short period can, so get advice first and apply where you're likely to be approved.
Can I refinance and borrow extra at the same time?
Yes, if the security and the business's cash flow support it. Many owners refinance and release equity together to fund equipment, clear tax debt or build a cash buffer.
Does the Banking Code protect small businesses when refinancing?
The Banking Code of Practice sets standards banks that subscribe to it must follow with small business customers, including notice before a loan isn't extended. Non-bank lenders aren't bound by it, so read their contract terms carefully.