Sales are coming in, but several business lenders take repayments before wages, rent and suppliers are paid. If that sounds familiar, the next step is to understand the cash shortfall—not automatically take another loan.
This guide is for Australian business owners reviewing business-purpose debt. Where suitable property equity is available, our business loan refinance service can assess whether a different structure is supportable. Refinancing is not guaranteed to reduce costs or solve an underlying trading problem.
1. Map the next few weeks, not just this month’s turnover
A monthly sales total can disguise a difficult week. Start with the opening bank balance and record expected customer receipts by the date they are likely to clear. Then list wages, rent, suppliers, tax commitments and every loan deduction on their actual dates.
Separate confirmed receipts from hoped-for sales. Prepare a second version with delayed customer payments and lower revenue. Your accountant can help build a short-term cash-flow forecast, including seasonal costs and overdue obligations.
Illustrative example: a busy business with a weekly shortfall
Hypothetical arithmetic only—not a client case or finance offer. Assume a business receives $12,000 in cleared cash during a week and must pay $9,000 in operating costs. That leaves $3,000 before financing commitments.
- Lender A deducts $300 on each of five business days: $1,500.
- Lender B deducts $1,000 for the week.
- Lender C deducts $800 for the week.
- Total loan deductions: $3,300, leaving a $300 shortfall.
If a $2,000 customer payment arrives a week late, the immediate gap becomes $2,300. This is a simplified cash snapshot, not an assessment of profitability or solvency. Include any additional tax, owner drawings, catch-up payments and other commitments in a real forecast.
2. Reconcile every loan before comparing options
Create one schedule showing each lender, repayment amount and frequency, remaining term, current payout figure, arrears and any security or guarantees. Check whether a facility described as unsecured includes a personal guarantee or other security obligations.
Request current payout letters rather than assuming the app balance is the amount required to close the loan. Ask about payout validity, early repayment charges, discharge costs and how closure is confirmed. Do not assume that stopping a direct debit ends the contractual obligation.
3. Consider alternatives before adding property security
- Speak to existing lenders: ask whether a revised schedule or temporary arrangement can be considered. Obtain any agreed changes in writing; approval is not automatic.
- Review cash collection: check overdue invoices, billing delays and commercially appropriate customer payment terms.
- Review operating costs: distinguish a temporary timing mismatch from a continuing loss that another loan will not fix.
- Seek independent support: the Small Business Debt Helpline provides free support for small business owners in financial difficulty.
If the business cannot meet its obligations, obtain accounting, legal or restructuring advice promptly. A refinance enquiry does not extend creditor deadlines or suspend existing loan obligations.
4. Test whether refinancing changes the underlying position
A property-backed refinance may be worth assessing where there is usable equity, verified payouts and an evidenced plan to meet the replacement loan’s obligations. The assessment should also leave a realistic allowance for ongoing business costs.
For a second mortgage, the existing first mortgage remains relevant: its repayments do not disappear. A short-term loan also requires a credible way to repay the principal at maturity, not simply an intention to apply for another loan later.
Security changes the risk. Moving unsecured business debt onto property means that property can be at risk if the replacement facility is not repaid. ASIC’s Moneysmart refinancing guidance also explains why lower repayments over a longer term can cost more overall. Its consumer guidance is useful for understanding this general trade-off; business-loan terms and protections require separate consideration.
5. Compare more than the new monthly payment
Put the existing and proposed arrangements side by side. Record:
- Net funds available after payouts and deductions.
- Interest, lender and broker fees, legal, valuation and discharge costs.
- Regular payments across all retained and replacement facilities.
- Whether interest is paid monthly, retained upfront or capitalised.
- The principal still owing at the same comparison date.
- Any final lump-sum repayment and the evidence supporting that exit.
Interest-only payments may look smaller because they do not reduce principal. Capitalising interest postpones a cash payment but increases debt. Neither should be described as a saving without comparing total costs and outstanding balances.
When to pause rather than refinance
Pause if the proposal relies on uncertain revenue, requires immediate further borrowing, consumes too much property equity or leaves an unsupported maturity payment. A property sale or future refinance also needs realistic timing and a contingency if it is delayed.
A credible proposal should explain what caused the pressure, what has changed and how the business avoids returning to the same position. Read our business debt consolidation guide for the broader assessment framework.
Prepare for an initial refinance discussion
Start with your total business debt, current repayment commitments, approximate property equity and required timeframe. Keep payout letters, mortgage statements and cash-flow information ready for the subsequent review. Do not include identity documents or full bank statements in an initial general enquiry.
Explore business loan refinance options with Basic Finance
General information only, not financial, legal, taxation or insolvency advice. Business-purpose finance only. Approval, pricing, security and terms are subject to lender assessment and verification. No savings, approval or settlement timeframe is guaranteed.