Refinancing is a financial arrangement where a business uses its assets as collateral to secure a new loan or restructure existing debt. This can improve cash flow by securing lower interest rates or longer repayment terms, thereby reducing monthly payments. It can also consolidate multiple debts into a single payment, simplifying financial management.

Refinancing can reduce overall interest costs if current rates are lower than when the original loans were taken. Additionally, it provides access to extra capital for growth and investment. Aligning debt with cash flow capabilities improves financial stability, and managing refinanced loans well can enhance the business’s credit profile, making future borrowing easier and more favourable.