REFINANCING DEBT

Refinancing commercial debt is perhaps the least known of all financing. When compared to the residential mortgage market – where price competition has meant that movement of mortgages between banks is a constant – it is notable how little commercial mortgages and lending in general change between banks and lenders.

For many years, most banks adopted a uniform approach to lending for business purposes, and commercial premises/property. One of the most hated was the bank’s “Annual Review” period whereby the bank may write a 20-year loan but would retain the right to review the company financials every year and fi in doubt, force a sale/redemption of the loan within 6 months.

Most famously this was common among some of the Big 4 lenders in rural areas whereby legal action was taken against two major banks for their over-eagerness to close business and sell farms below market value.

Thankfully recent changes, mostly due to broker competition, have meant an explosion in lending options and terms.

There are lenders now, some offering 30-year terms, with no review periods. Interest-only periods, and many other lending options that will best suit your business and cash flow.