Calculate your potential monthly savings and total interest reduction by refinancing your commercial debt.
Refinance Summary
New Monthly Payment:$0.00
Monthly Savings:$0.00
Lifetime Interest Savings:$0.00
Break-Even Period:0 Months
Net Financial Benefit:$0.00
Why Use a Business Loan Refinance Calculator?
In the evolving world of commercial finance, interest rates fluctuate constantly. A business loan refinance calculator helps entrepreneurs determine if replacing an existing debt with a new one makes financial sense. By inputting your current balance and comparing it against new market rates, you can visualize the impact on your company's cash flow.
Understanding the Metrics
When you use our tool, we focus on four critical components of a business refinance:
Monthly Savings: The immediate increase in your monthly cash flow.
Lifetime Interest Savings: The total amount of money you stop paying to the bank over the life of the loan.
Break-Even Point: How many months it takes for your monthly savings to cover the cost of the refinancing fees (appraisal, origination, and legal fees).
Net Benefit: Your total savings minus the cost of the refinance.
How to Calculate Your Business Loan Refinance
To get the most accurate results, you will need your most recent loan statement. Follow these steps:
Determine your Current Balance: This is the payoff amount, not the original loan amount.
Identify your Current Payment: Use the principal and interest portion only for the most accurate comparison.
Check New Market Rates: Contact lenders to see what rates you qualify for based on your current credit profile.
Estimate Fees: Commercial refinancing typically involves fees ranging from 1% to 3% of the loan amount.
Example Calculation
Imagine your business has a $250,000 balance on a loan at 9% interest with 60 months remaining. Your current payment is $5,189. If you refinance into a new 5-year loan at 6.5% with $3,000 in closing costs:
New Monthly Payment: Approximately $4,892
Monthly Savings: $297
Break-Even Point: ~10 months
Total Interest Saved: Over $17,000 across the 5-year term.
Is Refinancing Right for Your Business?
Refinancing isn't just about a lower rate. You should consider it if your business credit score has improved significantly, if you need to extend the term to lower payments during a slow season, or if you want to switch from a variable interest rate to a fixed rate to ensure predictable future costs. However, always check for "prepayment penalties" on your current loan, as these can negate the savings provided by a lower interest rate.