Best Options for Refinancing Business Loan

Refinancing a business loan is not merely a financial move – it's a wise decision that can open up growth, simplify cash flow, and set your business up for success in a competitive environment. Did you know that, based on the 2023 Small Business Credit Survey, 24% of businesses that applied for financing did it to refinance their business or pay their debt?

Are you looking for the same? You’re in the right place if you are looking for the best options for refinancing business loan in India. At My Mudra, we keep things transparent, quick, and customised to your specific requirements.

What does Refinancing a Business Loan mean?

Refinancing a business loan means paying off your initial loan using a new loan – hopefully one with better terms, such as a reduced interest rate, lower monthly payments, or a longer period of repayment. The new loan is then substituted for the old one, and you now have just one, easier-to-handle payment. This can help you:

• Lower your overall interest costs
• Free up working capital for operations or expansion
• Consolidate multiple debts into one
• Switch from a variable to a fixed interest rate for predictable payments

At My Mudra, we help you apply for business loan refinancing with minimal paperwork and maximum clarity.

Why Should You Consider Refinancing?

Let’s look at some real-world scenarios:

• Interest Rates Have Dropped: If you took a loan when rates were high and the market has since improved, refinancing can save you lakhs in interest over the loan term.
• Improved Credit Score: If your business credit profile has strengthened, you may now qualify for better rates or longer terms.
• Cash Flow Crunch: Extending your loan tenure can reduce monthly outgo, giving you breathing room to manage operations or invest in growth.
• Debt Consolidation: Juggling multiple loans? Refinancing can combine them into a single, easier-to-manage payment.

Example:
A manufacturing business with high-interest loans and a costly line of credit refinanced into a single SBA loan, slashing monthly payments by over ₹19 lakh annually and freeing up capital for expansion.

Best Options for Refinancing Business Loan in India

At My Mudra, we offer a range of refinancing solutions to match your business profile, loan size, and goals. Here are the most popular options for refinancing business loan:

1. Term Loan Refinancing

Replace your existing business loan with a new term loan at a lower interest rate or with an extended tenure. Ideal for businesses with improved credit or those seeking predictable, fixed repayments.

• Who it’s for: Businesses with regular cash flows and clear repayment capacity
• Benefits: Lower interest rate, reduced EMI, longer tenure

2. Working Capital Loan Refinancing

Convert your high-interest working capital loan or overdraft into a more affordable facility. This is particularly helpful if you have been under expensive credit lines or short-term loans.

• Who it’s for: Businesses with seasonal cash flow fluctuations
• Benefits: Lower rates, flexible repayment, better liquidity

3. SBA/CGTMSE-Backed Loan Refinancing

Leverage government-backed schemes (such as CGTMSE) to refinance at highly competitive rates and longer payback tenures.

• Who it’s for: MSMEs and startups with a minimum 1 year in business
• Benefits: Lower rates, minimal collateral, longer tenures

4. Alternative/Online Lender Refinancing

If traditional banks are slow or have strict eligibility, online lenders like My Mudra offer fast, digital refinancing solutions. These often come with flexible criteria and rapid disbursal.

• Who it’s for: Businesses needing quick turnaround or with limited collateral
• Benefits: Fast approval, minimal paperwork, flexible eligibility

5. Refinancing Your Business Line of Credit

Change from a fixed-term loan to a continuous line of credit. This allows you to borrow as needed, repay, and borrow again – perfect for businesses with fluctuating needs.

• Who it’s for: Businesses with unpredictable cash cycles
• Benefits: Ongoing access to funds, pay interest only on what you use

When Is the Right Time to Refinance?

Timing is everything. Consider refinancing your business loan when:

• Interest rates in the market have dropped
• Your business credit score has improved
• You want to consolidate multiple debts
• You’re struggling with high monthly payments
• You want to switch from variable to fixed rates for stability

However, always weigh the benefits against potential costs like prepayment penalties, processing fees, or changes in total interest outgo.

How to Apply for Refinancing Business Loan through My Mudra

Refinancing your business loan with My Mudra is a seamless process:

1. Check Eligibility:

• Indian citizen, age 25-65
• Business vintage of at least 6 months
• CIBIL score of 650+
• Minimum turnover of ₹10 lakh per annum
• Regular ITR filings

2. Gather Documents:

• KYC documents (PAN, Aadhaar)
• Business registration and licenses
• Last 6–12 months’ bank statements
• Existing loan statements
• Financials: Profit & Loss, Balance Sheet, ITRs 

3. Apply Online:

• Fill out our simple online application form
• Upload documents digitally for instant review

4. Get Personalised Offers:

• We match you with the best refinancing options based on your profile

5. Approval & Disbursal:

• Quick approval, transparent terms
• Funds disbursed to close your old loan and start your new one

Pros and Cons of Refinancing a Business Loan

Tips for Maximising Refinancing Benefits

• Review your current loan agreement: Check for any prepayment penalties or lock-in periods.
• Compare multiple offers: At My Mudra, we help you compare the best options for refinancing business loan so you get the most favourable terms.
• Calculate the true savings: Use our online calculators to see how much you’ll save over the new loan term.
• Maintain a good credit profile: Timely repayments and healthy business financials improve your eligibility for the best rates.
• Consider your long-term business goals: Don’t just focus on lower EMIs, ensure the new loan aligns with your growth plans.

Conclusion

Refinancing a business loan can be a game-changer. It helps you save money, simplify your finances, and give your business the space it needs to flourish. At My Mudra, we're committed to delivering you the best deal on refinancing business loan in India, with an open, trouble-free experience and expert guidance at every stage.

Ready to take the next step? Refinance instant business loan with My Mudra today and open your doors to smarter, more flexible financing for your business future.

Also Read: Small Business Loan: Quick Funding with Low Interest Rate