Refinancing 101
Refinancing 101
Refinancing 101: When to refinance business assets – and when to avoid it.
Refinancing business assets can be a powerful tool to inject liquidity and improve financial stability, provided it is approached with a clear strategy. At Airedale Finance, we specialise in tailored solutions for machinery, vehicles, and equipment to ensure your business has the necessary resources to thrive.
Refinancing allows a business to leverage the value of assets it already owns, such as plant machinery or commercial vehicles, to access capital or improve debt structures. While it offers significant benefits for growth and stability, it is not a universal solution for every financial challenge.
Benefits of Refinancing
Asset refinancing provides flexible options for businesses looking to optimise their balance sheets. Key advantages include:
-Release Cash: Unlock equity from vehicles, plant, or equipment you already own to use elsewhere in the business.
-Restructure Borrowing: Move existing debt onto a term that better aligns with your current cashflow requirements.
-Support New Projects: Fund expansion or new initiatives without depleting your daily working capital reserves.
When to Reconsider
While refinancing is a valuable tool, certain "red flags" suggest it may not be the right move. If the cost of the new facility significantly exceeds the value of the asset or if existing terms are more favourable than current market rates, hanging on to original agreements often makes more sense. Additionally, if the primary goal is to cover fundamental operational losses rather than strategic growth, other financial interventions may be more appropriate.
Questions to Ask
Before signing any new agreement, there are many things that you should the following is a start guide to ensure the facility meets your long-term goals:
-Does the new repayment schedule match my seasonal cashflow peaks and troughs?
-What are the total costs over the full term compared to my current arrangement?
-Are there early repayment charges on my existing facilities that outweigh the benefits of moving?
How can Airedale Finance Can Help?
Based in Pembrokeshire and South Wales, but accessible across the entire UK Airedale Finance provides expert support for agricultural, commercial, and retail businesses. We offer a "no-pressure" review of your current facilities to determine if refinancing is the right path for your specific needs.
If you would like to explore your options, please contact Dan at 07895 228475 or visit our contact page for a free consultation.
