Key takeaways
- Lower payment does not guarantee lower cost
- Get current payoff statements
- Refinancing should accompany a cash-flow plan
Identify the objective
The goal may be lower payments, fewer creditors, a longer term, removal of daily debits, or additional capital. Each objective leads to different tradeoffs.
Document the assumptions behind this part of the decision and compare them against the actual financing agreement. Terms, eligibility, and legal treatment vary by provider and product.
Calculate the true payoff
Request written payoff amounts and review prepayment treatment. The current principal balance may not equal the amount required to close an obligation.
Document the assumptions behind this part of the decision and compare them against the actual financing agreement. Terms, eligibility, and legal treatment vary by provider and product.
Compare the full horizon
Model total dollars, payment cadence, maturity, fees, collateral, and guarantees. A longer term can improve cash flow while increasing lifetime cost.
Document the assumptions behind this part of the decision and compare them against the actual financing agreement. Terms, eligibility, and legal treatment vary by provider and product.
Address the root cause
If debt accumulated because margins, collections, pricing, or expenses are structurally weak, refinancing alone may only postpone the pressure.
Document the assumptions behind this part of the decision and compare them against the actual financing agreement. Terms, eligibility, and legal treatment vary by provider and product.
Important
This guide is educational and does not provide financial, legal, tax, or accounting advice. SourcePoint is a marketplace, not a direct lender. Review provider-specific terms and seek qualified advice where appropriate.
Frequently asked questions
Can merchant cash advances be refinanced?
Some providers offer consolidation or refinance structures, but eligibility, lien position, payoff terms, and total obligations can make transactions complex.
Does refinancing hurt business credit?
Credit impact depends on inquiries, new accounts, utilization, payoff reporting, and payment performance. Review both business and personal credit implications.