Refinancing a Business Loan When Rates Are Rising | Probiz
Business Refinance
Should You Refinance Your Business Loan When Interest Rates Are Rising?
Rates have gone up four times this year. If you've been waiting for them to fall before looking at your business loans, here's what a refinance can still change, what it can cost, and when it isn't worth doing.
Probiz Finance · Updated 1 October 2026 · 8 minute read · Reviewed by Pooja Choudhary, Founder & Director
Short answer: Refinancing a business loan when rates are rising can still make sense, but usually for reasons other than a lower rate. A refinance can restructure repayments, combine facilities, deal with ATO debt or prepare for a balloon or fixed-term expiry. Whether it's worthwhile depends on your current facilities, exit costs and how lenders view your business today.
4.60%
RBA cash rate target from 29 September 2026
4th
increase in the cash rate during 2026
11.51%
ATO general interest charge, Oct–Dec 2026, compounding daily
1 Jul 2025
GIC incurred from this date is no longer tax deductible
Sources: Reserve Bank of Australia, Monetary Policy Decision, 29 September 2026; ATO, General interest charge (GIC) rates; ATO, Denying deductions for ATO interest charges.
When rates rise, the natural instinct is to wait. But most business owners don't feel their loans through the headline rate. They feel them through how many repayments leave the account, how often, and what falls due next. This guide follows one composite business owner, David, through exactly that.
Meet David — illustrative example
A growing business, five repayments, and a balloon on the horizon
David runs an established commercial fit-out business in Melbourne's east. Over seven years he has borrowed as the business grew: a bank term loan, two equipment loans for vans and machinery, an overdraft, and a short-term loan he took during a tight few months last year. He's also on an ATO payment plan for an overdue BAS.
That's five separate loan repayments, one of them debited every business day. One of the equipment loans has a balloon payment due in nine months.
When the Reserve Bank lifted rates again in September, David's reaction was simple: "There's no point looking at refinancing until rates come back down."
David is a composite character created to illustrate a common scenario. He is not a real client.
What David thinks, what's actually happening, and what to do
What David thinks
A refinance is only worth doing when it brings a lower interest rate.
What's actually happening
A lower rate may not be on offer right now. But his daily debits, his five separate repayments, his ATO debt and the balloon due in nine months can all be reviewed regardless of where rates sit.
What to do
List every facility with its repayment pattern and next key date, get payout figures, then decide which facilities are worth reviewing and which are best left alone.
That shift matters. The question stops being "will I get a better rate?" and becomes "does this structure still suit the business I run today?"
Carrying several facilities with different key dates? A short call can help you work out which ones are worth reviewing first.
What can a refinance still change if the rate doesn't come down?
For most businesses, the way a loan is structured affects cash flow every week, not just the headline rate. A refinance review usually looks at six areas.
A refinance review looks at the whole structure. Which of these matter depends on your facilities and your business.
How and when repayments come out
Some short-term and cash-flow loans are repaid by daily or weekly debits. A facility with monthly repayments may sit more comfortably with how revenue arrives. Any change is subject to assessment.
How many facilities you're carrying
Bringing some facilities into one can mean fewer repayments and a single review date. Whether it lowers overall cost depends on the facilities, the security and the cost of exiting each one.
A key date getting closer
A balloon on vehicle or equipment finance can generally be paid out, refinanced or rolled into another facility, depending on the asset, the business and the lender. See our asset finance page.
ATO debt alongside your loans
Tax debt now costs more to carry than it used to. Some lenders may consider refinancing it, subject to assessment. More on this below.
Equity that could fund the next step
If a property has increased in value or a balance has been paid down, there may be equity for working capital, expansion or buying a business, depending on valuation and lender criteria.
A business that has moved on
If you borrowed through a short-term, private or low-documentation loan when the business was younger, a longer trading history and lodged financials may now open different lending options.
Can refinancing increase the total interest you pay?
Yes. This is the trade-off that's easiest to miss. Extending a loan term or adding an interest-only period can ease repayments now while increasing the total interest paid over the life of the loan. Moving short-term debt into a longer facility can have the same effect.
The repayment view
What leaves the account each month
How often it leaves
Whether the business can comfortably manage it
The total-cost view
Total interest over the full term
Establishment, valuation and legal costs on the new facility
Break costs and discharge fees on the old one
How long you expect to keep the loan
A useful refinance comparison puts both views side by side. A lower repayment on its own doesn't tell you whether the change is worth making.
How does ATO debt change the refinance picture in 2026?
Two ATO settings make tax debt more expensive to carry than it used to be. The general interest charge (GIC) is 11.51% a year for October–December 2026, and it compounds daily. And GIC incurred on or after 1 July 2025 is no longer tax deductible.
Some lenders may consider refinancing ATO debt into a business loan or line of credit, subject to assessment, and lender approaches to tax debt vary. Before deciding, compare the total cost of each option, including fees.
The tax treatment of ATO debt and of any new borrowing is a question for your accountant. Probiz Finance can help with the lending side only.
Has Payday Super changed what your working-capital facility needs to do?
Since 1 July 2026, employers have been required to pay super with each payday rather than quarterly. For some businesses that has changed when cash leaves the account, in ways an overdraft or working-capital facility set up years ago may not have anticipated.
If your cash-flow timing has shifted, it's worth checking whether the facility you have, including its limit, its structure and its next review date, still fits how money moves through the business.
What costs can outweigh the benefit of refinancing?
Leaving one facility and setting up another usually involves costs. Depending on the loan, these may include:
Break costs
Common on fixed-rate loans that are repaid before the fixed term ends.
Discharge or early repayment fees
Charged by some current lenders when a facility is closed early.
Establishment and application fees
Charged by some lenders to set up the new facility.
Valuation and legal costs
Usually relevant where property is offered as security.
Ask your current lender for payout figures, including any break costs, before comparing options. If the cost of switching outweighs the benefit over the period you expect to hold the loan, staying put or renegotiating with your current lender may be the better choice.
When should you start reviewing your business loan?
Ideally 6–12 months before a key date such as a balloon, fixed-rate expiry, interest-only expiry or scheduled lender review. That window leaves time to do things properly. Leaving it until the final few weeks narrows the choices. Our guide to renewing business loans explains what happens at a scheduled review.
An illustrative timeline only. The right timing depends on your facilities and how quickly you can pull your numbers together.
Five steps to review your business debt
Put every facility on one page
For each loan, overdraft and ATO payment plan, note the lender, balance, repayment amount, repayment frequency and next key date.
Mark what's coming up
Highlight anything due in the next 12 months: a balloon, the end of a fixed rate or interest-only period, or a scheduled lender review.
Ask for payout figures
Request a payout figure from each current lender, including any break costs or discharge fees. This is the number that decides whether switching is worth it.
Bring your accountant in early
Get up-to-date financials and BAS ready, and ask about the tax side of any ATO debt or new borrowing.
Compare repayment and total cost together
Look at each option on both views. Some facilities may be worth changing. Others may be best left where they are.
What do lenders look at when you refinance a business loan?
A refinance is assessed on how the business is performing now, not when it first borrowed. Each lender weighs these factors differently, which is why the same business can be viewed differently from one lender to the next.
Lenders commonly consider these factors for the business and, often, its directors. Requirements vary by lender and product.
When might refinancing not make sense right now?
A refinance isn't the right move for every business. Here's how the common situations tend to sit.
Signs a review may be worthwhile
Several separate repayments, some daily or weekly
A balloon, fixed term or lender review due in the next 12 months
ATO debt sitting alongside your business loans
A stronger trading record than when you first borrowed
Cash-flow timing that has changed since the facility was set up
Signs it may not make sense now
Exit costs outweigh the benefit over the time you'll keep the loan
The loan is close to being repaid
The current structure already suits your cash flow, with no key date approaching
Recent results are weaker than when you last borrowed, so a reassessment may lead to less favourable terms
Even when switching doesn't make sense now, a review can still help you plan ahead of the next key date.
Back to David
How it played out — illustrative example
David put every facility on one page: lender, repayment, frequency and next key date. It was the first time he'd seen the whole picture in one place. He asked each lender for payout figures and spoke with his accountant about the ATO debt and the tax side of any new borrowing.
In a conversation with a broker, the facilities sorted themselves into three groups. The bank term loan was on a fixed rate with break costs that outweighed any benefit, so it stays where it is for now. The short-term loan with daily debits and the equipment loan with the balloon became the focus, with time to compare options before the balloon falls due. The ATO debt is being looked at together with his accountant's advice.
David didn't wait for rates to fall. He also didn't refinance everything. What changed is that he now knows which facilities are worth reviewing, and when.
David's situation is an illustrative composite, not a specific client case. It is not a prediction of any lending outcome.
Does David's situation sound like yours?
This guide is likely relevant if two or more of these apply:
Your business makes three or more separate loan repayments
At least one facility is repaid daily or weekly
A balloon, fixed term, interest-only period or lender review falls due in the next 12 months
You're carrying ATO debt alongside your business loans
Your business is in a stronger position than when it first borrowed
Your cash-flow timing has changed since Payday Super started
If commercial property is part of your picture, our commercial refinance calculator gives an indicative view of how much you may be able to borrow or release.
Frequently asked questions
Should I wait for interest rates to fall before refinancing my business loan?
Not necessarily. No one can say when rates will fall, and a refinance review isn't only about the rate. If a key date such as a balloon or lender review is approaching, waiting can narrow your options. If nothing is due and your structure already suits the business, there may be no need to act now.
Can I refinance just one of my business loans?
Yes, facilities can be reviewed one by one. Some may be worth refinancing, while others are best left where they are, particularly where break costs apply.
Will refinancing lower my repayments?
It may, but not always. A lower repayment can come from a longer term, which can increase the total interest paid. Compare both the repayment and the total cost before deciding.
How far ahead should I start reviewing a loan?
Ideally 6–12 months before a key date such as a balloon, fixed-rate expiry, interest-only expiry or scheduled lender review. That leaves time to gather your numbers and compare options without pressure.
Can ATO debt be included in a business refinance?
Some lenders may consider refinancing ATO debt into a business loan or line of credit, subject to assessment. Speak with your accountant about the tax treatment before deciding.
Does Probiz Finance give tax advice?
No. Probiz Finance is a finance broker. We help with the lending side: reviewing your facilities, considering which lending options may suit, and preparing applications. Tax questions are for your accountant.
Not sure whether your business debt still fits your business?
Pooja Choudhary is Founder and Director of Probiz Finance. Having previously worked with NAB and ANZ, she understands how lenders assess business borrowers and helps clients navigate their finance options. Probiz Finance works with 50+ lenders, including banks and non-bank lenders. There's no fee for the review.
