Guide to Business Debt Refinancing

Debt restructuring can help save your business
When you refinance business debt, you are taking a new loan and consolidating your debts with a better interest rate. Three important things to know:

1. Establish a clear need to refinance. A company often refinances to improve its cash flow and get access to more working capital. But be sure you exhaust other options that may be cheaper in the long run. For example, can you sell assets instead?
2. When refinancing a secured loan you will usually be able to finance up to 80 percent of the value of the collateral. The loan period varies and depends on the amount of the loan, the collateral and how much risk the lender perceives.
3. Analyze the true costs of the refinancing. Compare interest rates and terms, including annual interest rate, total finance charge, service fees, debt reduction fees, listing fees. Learn the background of the lending institution, its track record and exactly how its refinancing debt plans work.

Action Steps
The best contacts and resources to help you get it done

Hire a firm that specializes in restructuring debt
The goal of these companies is to restore your business profits by reshaping your balance sheet and profit and loss statements. If your debt ratio is 50 to 70 percent, consider consolidating your debts.
I recommend: Business Capital offers a free consultation on restructuring business debt and avoiding bankruptcy. Lloyd Benton & Taylor, a corporate debt restructuring firm, has more than 20 years experience helping public and privately held corporations. GE Commercial Finance has an online form to help you find the right financing.

Seek help from a debt management company
This is an option if you've been late on several payments and some have gone into collections. Check out how often the agency pays creditors, if it has a reserve fund and if it's a member of the Better Business Bureau.
I recommend: BusinessDebtCounseling.com will help restructure your debt. Commercial Credit Counseling converts short-term debt into manageable long-term accounts. SmallBusinessLoans.com says it restructures debt for small businesses. Loofbourrow, based in New York, has a division called Distressed Advisory and Restructurings that includes debt refinancing.

Turn to lawyers
Attorneys who understand the nuances of bankruptcy law and want to keep you away from that may be best suited to help you refinance your debt.
I recommend: YourDebtLawyer.com is a law firm that specializes in restructuring business debt with its team of attorneys, accountants, financial planners and business executives. You pay on a results-only basis.

Tips & Tactics
Helpful advice for making the most of this Guide

• Be prepared to show lenders a personal guarantee, three years of financial statements, tax returns, lease or purchase agreement of the property where your business is located and credit card statements.
• Ask yourself hard questions before you assume new debt: Do you have sufficient assets to convince a bank to extend credit? Do you have the support of investors? Can you meet future financial and operating demands of another debt?
• Keep a good relationship with your creditor. Be honest, timely and consistent with your communications and commitments.