When to refinance your business loan

Three signals it's time to refi

• Your rate is 4+ points above current market. If you took an online loan at 35% and your business has matured (2+ years, stronger cash flow), refinance to SBA at 10-12% saves you 6 figures on a $250k balance.
• Your monthly payment is straining cash flow. Extending term + slightly higher total interest but materially better monthly cash flow is sometimes the right call — DSCR matters more than total interest for survival.
• You consolidated multiple loans/credit lines. One payment vs five reduces administrative overhead and gets you better rate via collateral pooling.

The prepayment penalty trap

Most online lenders charge 3-5% of remaining principal as prepayment penalty. On a $200k balance with 6 months left, that's $6-10k. Worth checking BEFORE you refi — sometimes the savings don't cover the penalty.

Refi options

• SBA 7(a) refinance — if you started with non-SBA, this is usually the win. 9-12% APR, 10-25 year terms.
• Bank term loan — if your business has matured + credit improved.
• Better-rate online (e.g., Funding Circle if you started with OnDeck) — quicker, smaller savings.