Understanding Short-Term Business Refinance Loans

What is a Business Refinance Loan?

A business refinance loan replaces one or more existing debts with a new facility. This can provide improved terms, greater flexibility, or faster access to capital. Business owners often use refinance loans to:

• Consolidate multiple loans

• Pay out expiring or high-interest debt

• Release equity from commercial or residential property

• Improve cash flow and liquidity

• Bridge to a sale or long-term funding

  
  

In contrast to traditional lenders, non-bank and private lenders offer streamlined processes and faster settlements, often with minimal documentation.

Mittagong Case Study: $875,000 Refinance

Loan Details:

• Amount: $875,000

• Term: 3 months

• Interest Rate: 9.25% per annum (capitalised interest)

• Security: Mittagong, NSW

• Purpose: Pay out an expiring private loan and top short-term liabilities for commercial investment opportunities.

  
  

The Challenge

The borrower was facing an imminent expiry of a short-term facility. A bank refinance wasn’t viable due to time constraints and document requirements. Delays would risk default, late penalties, and potential damage to the business’s credit standing.

The Solution

A private lender was engaged to provide a refinance facility against the Mittagong property. The deal settled in just under five business days. Funds were used to repay the existing loan and consolidate outstanding business debts.

The Result

The business preserved its credit profile, avoided legal action, and gained financial breathing room to restructure its operations over the next quarter.

Why Consider a Short-Term Business Refinance Loan?

Short-term refinance loans, typically ranging from three to twelve months, are increasingly used by Australian businesses looking for flexible funding. Key advantages include:

Fast Turnaround

Private lenders can settle within days. For time-sensitive situations, this is critical.

Minimal Documentation

Unlike traditional banks, private lenders generally assess applications based on the equity in the property, not income or financial statements.

Flexible Loan Structures

Options include interest-only repayments or capitalised interest, depending on cash flow requirements.

Simple Exit Strategies

Many borrowers repay the loan through the sale of an asset, long-term refinance, or business income.

How Does a Private Refinance Loan Work?

The process is straightforward and focused on speed.

1. Initial Assessment: You provide a summary of your funding needs, the existing debt to be refinanced, and details of the security property.

2. Valuation and Terms: The lender assesses the property and proposes loan terms, typically within 24 to 48 hours.

3. Loan Approval and Settlement: Once terms are accepted, legal documentation is issued and settlement can occur within five to seven business days.

4. Loan Repayment: At the end of the term, the loan is repaid via your chosen exit strategy.

   
   

Private lenders will generally lend up to 65% to 75% of the property’s value. In this case, the Mittagong property had ample equity to support the loan.

Common Use Cases for Refinance Loans

Refinance loans serve a range of business needs, including:

Avoiding Expiry of Existing Loans

Private refinance loans are ideal when an existing short-term facility is approaching expiry and banks are too slow to act.

Consolidating Multiple Debts

Businesses with several short-term obligations can roll them into one facility, simplifying cash flow management.

Bridging to a Property Sale

If a property is under contract but settlement is delayed, a short-term loan can provide funds in the interim.

Funding Business Transition

Whether you are restructuring or pivoting, a refinance loan can help manage financial obligations during the transition period.

What Are the Key Risks?

While these loans offer many advantages, there are important risks to consider.

Exit Strategy

A clear plan for repaying the loan is essential. This could include a property sale, long-term finance, or income from operations.

Higher Interest Rates

Private loans typically carry higher rates than traditional loans. However, the trade-off is speed and flexibility.

Market Valuations

Loan amounts are based on current market valuations. If a property value is lower than expected, borrowing capacity may be reduced.

Why This Mittagong Loan Worked

Several factors contributed to the success of this refinance:

• The borrower had a clear and time-sensitive funding requirement.

• The security property had strong market value and sufficient equity.

• A defined exit strategy was in place (property already on the market).

• The borrower acted early and engaged the right lender.

  
  

This allowed the deal to move quickly, with minimal friction, and delivered a positive outcome for all parties involved.

How to Qualify for a Private Business Refinance Loan

Most non-bank lenders in Australia will consider the following:

• Real estate security (residential, commercial, or industrial)

• Loan amounts typically between $50,000 and $10 million

• Loan terms from 6 weeks to 12 months

• A clear funding purpose and exit strategy

  
  

You won’t usually need to provide tax returns, BAS, or financials. The focus is on the asset and your strategy.

Is a Short-Term Refinance Loan Right for You?

If your business is approaching a funding deadline, experiencing cash flow issues, or looking to consolidate short-term liabilities, a private refinance loan can be an effective solution. The Mittagong case highlights how a tailored loan, backed by a solid asset and a defined strategy, can prevent disruption and create stability.

Private lending is not just for distressed situations. It’s a tool that growing businesses are using to move faster, stay agile, and take control of their financial future.

Act early. Know your options. And work with a team that understands business lending beyond the banks.

Ready to Explore Private Refinance Options?

At Innovate Funding, we help Australian businesses access fast, flexible non-bank loans. Whether you're facing an expiring facility or planning a growth move, our team is ready to support your next step.

Get in touch today for an obligation-free assessment.