Refinancing guide · Sorbus Finance
What are the alternatives to refinancing business debt?
Quick answer
Alternatives to refinancing include asking your current lender to vary terms, using invoice finance to release cash tied up in receivables, using asset finance for equipment needs, improving cash collection and costs, or speaking to a free debt advice service. Which fits depends on why the pressure exists and whether the business is fundamentally viable.
How do the main alternatives compare?
The right option depends on the cause. A refinance addresses the shape of existing debt. Some alternatives address the source of cash pressure instead.
| Option | May suit | Watch for |
|---|---|---|
| Ask current lender to vary terms | Temporary pressure, good relationship | Variation fees, extra interest from extension |
| Invoice finance | Cash tied up in unpaid B2B invoices | Fees, customer concentration, contract terms |
| Asset finance | Equipment purchases straining cash | Provider ownership or security rights; settlement terms |
| Operational changes | Slow collections, cost creep | Takes time; needs discipline |
| Equity or owner funds | Growth with uncertain cash flows | Dilution or personal risk |
| Free debt advice | Arrears, creditor pressure, losses | Check service eligibility and remit |
Can my existing lender help instead?
Lenders may consider payment holidays, interest-only periods or term extensions. These are at their discretion and can increase the total cost. Approaching early, before payments are missed, usually gives more room for a sensible conversation.
Could invoice finance or asset finance solve the real problem?
If the pressure comes from waiting for customers to pay, invoice finance may release cash against eligible invoices rather than adding a fixed term loan. If equipment purchases are absorbing cash, asset finance may spread their cost over an agreed term. The provider may own the asset or hold security rights, depending on the agreement; the term is not automatically the asset’s useful life.
Neither is automatically cheaper or simpler than a loan. They work differently, and contracts vary.
When should you seek debt advice rather than finance?
If the business is behind with several creditors, receiving formal demands, or cannot see how it will meet obligations even after a refinance, independent debt advice is a better starting point than new borrowing. Business Debtline offers free advice; check their eligibility and geographic remit directly. Insolvency practitioners can also advise on formal options.
Diagnose the cause first
- Is the pressure from timing (late payers), structure (wrong term) or performance (losses)?
- Have you asked your current lender what they can offer?
- Do debtor days or stock levels explain the cash gap?
- Would a non-borrowing change close the gap?
When should you not borrow to refinance?
Be candid with yourself. Refinancing is probably the wrong move if:
- Using any form of new finance to cover persistent losses without advice
Free, independent help is available from Business Debtline. Check its eligibility and remit for your business.
General information, not financial, legal or tax advice. This page explains concepts in a UK context. Whether any option is available, and on what terms, depends on the lender, the specific agreement and your business's legal structure. Sorbus Finance is a broker, not a lender. Read our initial disclosure and commission disclosure.
Frequently asked questions
Is a payment holiday better than refinancing?
It can help with a short, temporary gap, but interest may continue to accrue and the total repaid may rise. It suits temporary problems better than structural ones.
Can I combine invoice finance with an existing loan?
Sometimes, but existing lenders may hold security that covers receivables. Check whether your current agreements permit it before applying.
Is equity a realistic alternative for a small business?
For some, especially where growth is planned. It avoids repayments but gives away ownership or control, and is a very different decision from borrowing.
Prefer to talk it through?
Leave your details to request a discussion about your borrowing. This form is an enquiry, not a loan application. Ask the adviser what consent and credit checks would be needed before a lender application proceeds.