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How refinancing business debt can buy you time & free up capital

How refinancing business debt can buy you time & free up capital

As your tech business progresses along its growth curve, so your financial needs change.  

To expand, hire staff, extend your cash runway or indeed fund your next step, you need flexible finance facilities that grow with your business.

But if your lender is unwilling to address your needs.

Or if you need more money than your lender is comfortable lending, then it’s time to think about refinancing your business debt.

You see, when you refinance your business debt, you can access:

  • More time and cash resources to execute your business growth strategy
  • More capital investment to expand and scale your business. Also, to further develop and market your products

How refinancing business debt can buy you time and free up capital for you to execute your tech business growth strategyWhat is business debt refinancing?

When you refinance your business debt, you convert existing debt facilities including outstanding or overdue amounts, into a new debt instrument.

In other words, you replace some or all of your existing expensive debt or facilities that you’ve outgrown with more affordable and suitably structured debt.


What is the real value that refinancing business debt offers?

When you refinance your business debt, you can strengthen your business financially. To illustrate, you can:


Secure more favourable loan terms

Research the debt market, in particular, private debt financing, and you’ll find lenders with a specific specialism in tech finance.

Private debt financing is significantly more flexible than conventional bank debt. Because, private debt funds have different requirements concerning valuation, restrictive covenants and personal guarantees.

What’s more, private debt funds can leverage IP to raise capital.


Reduce the cost of capital

Regularly review your capital needs, and you’ll get the best possible terms for your business.

For example, you can draw down debt in tranches, thus reducing the amount of interest you pay overall.

And because drawing debt in tranches reduces the risk for the lender, you can access more capital at a more affordable price in the long term.


Free up cash flow to generate more working capital

High-interest rates and hefty loan payments increase monthly expenses and make it harder to turn a profit.

When you refinance your business, you aim to restructure your debt so that it is sustainable over the long term.

Talk to a debt specialist, and you can link your capital structure to your business model to give you:

  • More flexibility
  • Free up cash flow

As well as access to capital for growth


Get greater operating flexibility

When you scale your business you aim to move your business into profitability by increasing revenue without incurring further significant costs.

Refinancing your business debt with tranched private debt funding can help you to improve capital efficiencies by giving you the capital you need to scale up your business cost-effectively.


Free up capital to reinvest back into your business

Whether you need:

  • To raise capital for an event-driven need such as an acquisition
  • Working capital to support growth
  • A runway to get you to the next funding round

Refinancing your business debt, or to put it another way, getting access to more suitable and flexible lending facilities, can free up the capital you need to make money, without you having to give away equity.


Fast access to cash

Unlike equity finance, where you need to build in a 3-9 months wait to get access to funds, debt finance can be in your bank account in weeks.


Where to start with refinancing your tech business?

First off compare your options. Shop around and compare facilities from a variety of private debt funds.

A debt advisor and broker who specialises in private debt financing can help you to access the many funds in the market.

Furthermore, it can also manage the process of refinancing your existing and expiring debt loans. Thus saving you from a time-consuming distraction when your focus is growth.


To sum up

Along your growth curve, you’ll encounter many points where refinancing your business debt is advantageous.

Debt finance should add value to your business and growth strategy.

If this is no longer the case, talk to a debt advisor and broker to get recommendations about the best capital structure, terms most suited to your business model and how to ensure you have sufficient capital to get you to the next step in your growth.

Trust me, it will be worth it.


And finally

If you’d like to discuss options for refinancing your tech business, drop me a line and we’ll set up a time to chat.