Refinancing guide · Sorbus Finance
Can refinancing help with business cash-flow pressure?
Quick answer
Refinancing can ease cash-flow pressure when repayments are badly timed or too concentrated, by spreading or restructuring them. It does not fix a business that spends more than it earns. If the cause is ongoing losses, refinancing may delay the problem and increase total debt, so free debt advice is often the better first step.
Is your cash-flow problem about timing or about losses?
Timing problems arise when money comes in after it needs to go out: seasonal trade, slow customer payments, or repayments due before income lands. These can sometimes be helped by restructuring debt.
Performance problems can arise when costs exceed income over a full trading cycle. Restructuring debt changes the borrowing agreement but does not by itself resolve an operating deficit. Review whether there is a credible route to sustainable cash generation.
| Sign | Likely timing issue | Likely performance issue |
|---|---|---|
| Profit over 12 months | Positive | Negative |
| Cash shortfalls | Predictable, recurring at points in the cycle | Growing month on month |
| Creditor arrears | Occasional, quickly cleared | Accumulating |
| Refinancing may help? | Possibly | Unlikely without wider changes |
How can refinancing relieve monthly pressure?
By changing the repayment profile. A longer term, a different collection date or replacing sales-based collections with fixed instalments can all alter monthly cash flow. Each has a cost, typically in total amount repaid, which should be weighed against the relief.
What are the red flags that suggest advice, not finance?
If you recognise several of the signs below, consider speaking to a free debt advice service or a licensed insolvency practitioner before applying for anything new. Directors of limited companies also have legal duties that become more significant when a company is in financial difficulty; take professional advice on what they mean for you.
- Arrears with HMRC, rent or suppliers that are increasing
- Formal demands or county court claims
- Using new borrowing to meet existing repayments
- Unable to forecast when the business returns to positive cash flow
Why does a cash-flow forecast matter here?
A simple 13-week or 12-month forecast shows whether a restructured repayment actually closes the gap. Lenders often find a credible forecast useful too. Build one before applying so you can see the effect for yourself.
Cash-flow self-assessment
- Twelve months of profit and loss reviewed
- Short-term cash-flow forecast prepared
- List of any arrears and their trend
- Current monthly debt repayments totalled
When should you not borrow to refinance?
Be candid with yourself. Refinancing is probably the wrong move if:
- Borrowing to pay HMRC arrears without exploring time-to-pay options and advice
- Refinancing where the forecast still shows a growing shortfall
Free, independent help is available from Business Debtline. Check its eligibility and remit for your business.
General information, not financial, legal or tax advice. This page explains concepts in a UK context. Whether any option is available, and on what terms, depends on the lender, the specific agreement and your business's legal structure. Sorbus Finance is a broker, not a lender. Read our initial disclosure and commission disclosure.
Frequently asked questions
Can I refinance if I am behind with HMRC?
Some lenders may consider it, many will not. HMRC may also discuss payment arrangements directly. Take advice before adding borrowing to settle tax arrears.
Will a longer term always ease cash flow?
It usually lowers the regular repayment, but it can increase total cost. Whether it eases cash flow depends on the new figure compared with existing repayments and fees.
Where can I get free help?
Business Debtline offers free business debt advice; check eligibility and remit on their website. An accountant can also help review your position.
Prefer to talk it through?
Leave your details to request a discussion about your borrowing. This form is an enquiry, not a loan application. Ask the adviser what consent and credit checks would be needed before a lender application proceeds.
