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Business finance to refinance existing debt

Refinancing business debt usually means one of three things: replacing an expensive short-term facility with a cheaper longer-term loan, consolidating multiple stacked merchant cash advances into a single repayment, or extending the term of an existing loan to lower the monthly cost. The right route depends on what you're refinancing — a single high-cost MCA repaid via daily card-takings has different options to a stack of three lenders each pulling from the same account. UK term lenders like Funding Circle and Allica Bank publish refinance criteria; specialist MCA consolidators exist for stacked advances. Refinancing into a longer term lowers monthly cost but typically raises total interest paid — the maths needs to make sense before applying. Lendrly maps which lenders accept refinance purposes and what they look at.

Why this use case matters

Stacked MCAs are one of the most common UK SME debt problems. A business takes a second or third advance to cover the daily debit of the first, and within a few months 30–60% of daily card sales are going to lenders. The fix is rarely another MCA — it's usually a longer-term unsecured loan with a single fixed monthly payment that buys back the daily cashflow.

Refinancing into a longer term reduces the monthly outflow but often increases total interest paid. A £100k MCA repaid in 6 months at a 1.35 factor rate costs £35k in fees; refinanced into a 3-year term loan at 15% APR, monthly payments halve but total interest can also approach £25–30k. The right call depends on whether monthly cashflow or total cost matters more for the business.

Finance types that usually fit

Based on how UK lenders typically underwrite this use case, the following finance categories are the most common fit:

UNS

Unsecured Business Loan

Term loan or credit line repaid through fixed instalments.

Eligibility map
SEC

Secured Business Loan

Larger bespoke cashflow or asset-backed debt.

Eligibility map
ASS

Asset Finance

Finance to buy/refinance equipment, vehicles or machinery.

Eligibility map

Finance types that usually don't fit

These categories are mentioned for completeness but typically aren't appropriate for this use case:

Eligibility questions UK lenders typically ask

  • Can you list every existing facility — lender, balance, monthly payment, factor or APR, end date?
  • Is the total monthly debt service below 30% of monthly revenue?
  • Do you have 12+ months of trading history and accounts to show?
  • Are all existing facilities up to date — no missed payments or defaults?
  • Is there a clear cashflow saving from the refinance, not just a delay?
  • Has the underlying revenue trend stabilised so the refinance doesn't just postpone the problem?

Documents to prepare

  • A full list of existing facilities with statements showing balances and payments
  • Last 6 months of business bank statements
  • Last filed accounts or year-to-date management accounts
  • VAT returns if applicable
  • Director ID and proof of address
  • A short summary of why the refinance is needed and how it improves the cashflow position

UK lenders that often look at this use case

The lenders below publish criteria consistent with this use case. Final approval is always subject to lender underwriting.

Frequently asked questions

Can I consolidate multiple business loans into one?
Yes — UK term lenders like Funding Circle, iwoca and Allica Bank accept debt consolidation as a purpose. The new lender pays off the existing facilities directly at completion. Stacked MCAs are harder to consolidate because the repayment is daily and the maths is different — specialist MCA consolidators exist.
Does refinancing always save money?
No. Refinancing into a longer term lowers monthly payments but usually raises total interest paid. The right comparison is: monthly cashflow saving vs. total interest cost over the new term. The maths often favours refinance when daily MCA repayments are choking cashflow even though total interest rises.
What if I have stacked merchant cash advances?
Stacked MCAs are a specific problem — multiple daily debits compound. A consolidation loan from a term lender (iwoca, Funding Circle) can buy back the daily cashflow with a single monthly payment. Specialist MCA consolidators also exist for cases where mainstream term lenders decline.
Will refinancing hurt my credit?
The application itself shows as a hard search. Closing the old facilities and replacing with a single new one is typically credit-neutral or positive long-term — fewer accounts active, lower utilisation. The risk is if the refinance application is declined and the underlying problem worsens.
Can I refinance asset finance?
Sometimes. Most asset finance contracts have early-settlement charges that need to be modelled in. Refinancing into a new asset finance facility with a lower rate or longer term can save money, but the early settlement of the original facility usually costs 1–3 months of interest.

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