Business Loan Refinance Calculator: Should I Refinance?
Use our free business loan refinance calculator to see if refinancing makes sense for your business.
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Refinancing a small-business loan could help you save on borrowing costs or lower monthly payments. But the math doesn’t always work out in your favor.
Use our business loan refinance calculator to see how refinancing could affect payments, total borrowing costs and more.
» MORE: How to refinance a business loan
How to use our business loan refinance calculator
1. Enter your current loan details
Remaining balance. The amount you have left on your current loan.
Monthly payment. What you currently pay your lender each month.
Annual percentage rate (APR). The yearly cost of your loan, expressed as a percentage. It includes interest plus any upfront fees, like origination fees, underwriting fees or closing costs.
Prepayment penalty. A fee some lenders charge when you pay back your loan early. Prepayment penalties are a percentage of your remaining loan balance and typically range from 1% to 5%. This calculator assumes the fee is rolled into your new loan.
» MORE: Average business loan rates
2. Enter your new loan details
Loan term. The number of years you’ll have to repay your new loan.
APR. The annual percentage rate on your new loan.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
3. Interpret your results
After you hit “calculate,” you’ll see right away how the potential new loan may impact cashflow and total borrowing costs.
You’ll also get a side-by-side comparison of the two loans, including details such as:
Loan amounts. The new loan may be higher if there’s a prepayment penalty on your current loan, since this calculator wraps that fee into the new loan.
Loan terms. This shows how your repayment timeline will change. A longer term usually means lower monthly payments and higher total interest, but it depends on your new loan’s APR.
Monthly payments. Your monthly payment may decrease if the new loan has a longer repayment window or lower APR.
Total interest costs. This helps you compare overall borrowing costs between the two loans.
Total payments. This is the full amount you’d pay over the life of each loan. Total payments include principal, interest and any fees.
Nerdy Perspective
Don’t let a lower monthly payment be the deciding factor. If the new loan comes with a longer term, you could end up paying a lot more in interest, even if your APR drops. Sometimes that extra cash flow is worth it. Just make sure you understand the long-term cost to your business before you refinance.
Five reasons to refinance a business loan
Here’s when it may make sense to replace your current loan with a new one:
You want to free up cash flow. Refinancing to a new loan with a longer term or lower rate can help reduce monthly payments. This puts more money in your pocket for day-to-day expenses or future growth.
You want to save money in the long run. Refinancing to a loan with a shorter term or lower rate can reduce total interest costs. This means more money stays in your business and less in your lender’s pockets.
You want to avoid a big balloon payment. Common with commercial real estate loans, balloon payments are a large, final payment at the end of a loan’s term. Refinancing can help you avoid that final bill, but you may have to come up with a down payment on the new loan first.
You want predictable payments. If your current business loan has a variable interest rate, refinancing with a fixed-rate loan can make budgeting easier or protect your business from rising rates.
You want loan flexibility. Some business loan agreements come with restrictive covenants or frequent repayment terms (like weekly or daily). Refinancing to a new loan with less restrictions can give you more control over your cash flow.
When’s the right time to refinance a business loan?
If you can’t qualify for a new loan with terms that fit your needs, refinancing will likely do you little-to-no good. Here’s when you might want to explore refinancing:
Your qualifications have improved. Your personal credit score, time in business and business revenue all play a big role in the types of loans you qualify for. If either of these have improved since you took out your original loan, you may be able to qualify for a new loan with better terms or rates.
Interest rates are lower. If market interest rates have dropped since you took out your current fixed-rate loan, it may be worth refinancing. Even a small drop in rates can translate to large cost savings. Just watch out for origination fees and other upfront costs that can offset the benefits.
You’re not currently drowning in debt. If you’re already struggling with payments, you’ll probably have a hard time qualifying for a new loan with better terms. You may find better relief by working with your current lender to place your business loan in forbearance, or even restructure your business loan.
Learn more about the refinance process
Once you’ve decided that refinancing is right for you, read more about how to refinance your business loan.