Everything You Need to Know About Refinance Commercial Loan

Greetings, readers! Are you a business owner struggling to keep up with your commercial loan payments? Or are you looking for ways to lower your interest rates and save money in the long run? Whatever your reasons may be, refinancing your commercial loan could be the solution that you’re looking for.

Refinancing a commercial loan can help you acquire better terms and rates, especially if you’re dealing with high-interest debt. In this article, we’ll explain everything you need to know about refinance commercial loan, including its benefits, criteria, and how to apply.

What is Refinance Commercial Loan?

Refinance commercial loan is a process of paying off an existing loan with a new loan that has better terms and rates. Business owners refinance their commercial loans for various reasons, including reducing their monthly payments, lowering their interest rates, or accessing equity in their property. Refinancing can also help businesses consolidate their debts, making it easier to manage payments and overall finances.

The Benefits of Refinance Commercial Loan

Refinancing your commercial loan can offer several benefits, such as:

Lower Interest Rates
Refinancing can help you acquire lower interest rates, which can save you money in the long run.
Lower Monthly Payments
By refinancing your commercial loan, you can reduce your monthly payments, leaving more cash flow for your business.
Cash-Out Refinancing
If your business’s property has appreciated, you can access equity by refinancing and using the excess cash for other upcoming expenses.
Debt Consolidation
By consolidating all your debts with one loan, refinancing offers you a better chance of managing your finances and reducing your stress.
Flexible Loan Terms
Refinancing gives you the flexibility to choose loan terms that are more favorable for your business, such as a longer repayment period, fixed or variable interest rates, and the ability to make balloon payments.

Criteria for Refinance Commercial Loan

While refinancing may seem like an attractive option for businesses, it’s important to understand the criteria. Here are some factors that lenders consider when assessing refinancing applications:

1. Creditworthiness

Lenders will look at your credit score, payment history, and financial statements to evaluate your creditworthiness. Generally, a credit score of at least 680 is required to qualify for refinancing.

2. Property Value

The value of your commercial property is another factor that lenders assess. Ideally, you want to have a property that has appreciated in value since you took out your initial loan. If your property value has declined, it could make it harder to qualify for refinancing.

3. Debt-to-Income Ratio

Lenders look at your debt-to-income ratio (DTI) to determine whether you’re able to repay the new loan. The DTI is calculated by dividing your monthly debt payments by your gross monthly income. Ideally, lenders prefer a DTI of 43% or lower.

4. Loan-to-Value Ratio

The loan-to-value ratio (LTV) is the amount of your loan divided by the value of your property. Lenders usually require an LTV of 75% or lower to qualify for refinancing.

5. Cash Flow

Your business’s cash flow is also an important factor when refinancing a commercial loan. Lenders will evaluate your cash flow to determine whether you’re able to repay the new loan.

How to Apply for Refinance Commercial Loan

Applying for a refinancing commercial loan involves several steps, such as:

1. Research Your Options

Research lenders that offer refinancing options, compare their rates and terms, and find the best option for your business’s needs.

2. Prepare Your Documents

Prepare your financial documents, such as your credit report, financial statements, and tax returns. Having these documents ready can expedite the application process.

3. Submit Your Application

Submit your refinancing application and wait for the lender to evaluate your application. Be prepared to answer any questions or provide additional information the lender may request.

4. Close the Loan

If your application is approved, you’ll receive a loan offer with the new terms and rates. Review the offer, negotiate if necessary, and close the loan.

Frequently Asked Questions (FAQs)

1. Can I refinance my commercial loan if I have bad credit?

It’s possible to refinance your commercial loan with bad credit, but it can be challenging. Lenders may require a higher interest rate or down payment to compensate for the risk.

2. Can I refinance my commercial loan if my property value has declined?

If your property value has declined, it can make it harder to qualify for refinancing. However, you may still be able to qualify if you have good credit and a strong cash flow.

3. Can I refinance my commercial loan with a different lender?

Yes, you can refinance your commercial loan with a different lender. However, you’ll need to go through the application process again and be prepared to pay closing costs and other fees.

4. What are the costs of refinancing a commercial loan?

The costs of refinancing a commercial loan can include origination fees, appraisal fees, title search fees, and other closing costs. Make sure you understand all the costs associated with refinancing before applying.

5. Can I refinance my SBA loan?

It’s possible to refinance your SBA loan, but it can be challenging. SBA loans typically have strict requirements, so you’ll need to have a good credit score, strong cash flow, and a solid business plan to qualify.

6. How long does it take to refinance a commercial loan?

The time it takes to refinance a commercial loan varies depending on the lender and the complexity of your application. Generally, it can take between 30 to 90 days to complete the refinancing process.

7. How often can I refinance my commercial loan?

There’s no specific limit on how often you can refinance your commercial loan. However, keep in mind that each refinancing application will require a new credit check and evaluation, which can impact your credit score.


Refinance commercial loan can help your business to achieve better loan terms, lower interest rates, and reduced monthly payments. However, before applying for refinancing, make sure you understand the criteria and evaluate your financial standing. It’s essential to research and compare lenders to find the best option that meets your business’s needs. By following the steps outlined in this article and considering the FAQs, you can make an informed decision about refinancing your commercial loan and take the necessary steps towards managing your finances better.

Are you ready to refinance your commercial loan and save money in the process? Take the necessary steps today and start enjoying the benefits of refinancing!

Closing Disclaimer

The information provided in this article is for educational purposes only and should not be construed as legal or financial advice. We recommend that you seek professional financial advice before making any decisions regarding your commercial loan or refinancing.