Alternatives to refinancing equipment loans in an increasing interest rate scenario can include targeted solutions financing to address key business issues. A key objective for many business owners with refinance is to achieve a lower interest rate to reduce monthly repayments. But if rates are higher than the original loan was established, the refinance process may not result in a better, lower interest rate.
That may be the scenario currently facing many businesses. The Reserve Bank (RBA) increased the cash rate in February 2026 and the markets are expected a further rise at either the 17 March or 5 May Monetary Policy Board meetings. The prospect for further rate rises strengthened on the back of recent inflation figures and with expectation of repercussions in the Australian economy from Middle East conflict with the USA, Israel and Iran.
With rates expected to rise across most lending markets at least once more this year, a lower rate may not always be a realistic prospect. Where the original loan was established on a Low Docs No Docs or Bad Credit basis, a lower rate may be achievable, even in the current rate rise scenario.
Where the loan was established at the best rates at the time, by a business with strong financials and good credit, the prospects may not be as high. Where a business using the accruals method of accounting opts to refinance with a change from Lease or Rent-to-Own to a lower rate Commercial Hire Purchase, a lower rate may be achievable.
If the prospect of a lower interest rate with refinance is not good, business owners may need to look ‘outside the square’. To look for solutions to the reasons as to why they need or choose to refinance. If achieving a lower interest rate and lower repayments are not realistically achievable, especially when taking into account the costs, other business finance options may be considered.
Why is there a need to refinance?
The need or choice to refinance can emanate from a range of business situations. Typically, it is that finance repayments are pressuring cash flow and a lower rate and lower repayments are sought.
Businesses may switch their focus from those repayments on that loan to taking a broader approach and considering the bigger business picture. For example, why the business is experiencing cash flow pressures.
Is the situation temporary or has there been a major change which indicates a longer-term issue?
Is the pressure coming from the increased cost of supplies and materials and operating expenses or is it coming from the income side of the business?
Is the receipt of payment for work not in line with when loan payments and other expenses need to be made?
Is the issue seasonally related such as in the agricultural sector?
By analysing the situation and isolating the root of the problem, finance alternatives to refinancing equipment loans may be found in our portfolio of commercial credit solutions.
Alternatives to Refinancing Equipment Loans
Where cash flow is under pressure, an alternative to seeking to refinance a large loan may be to source cash flow support finance. This type of finance typically involves a Lender Overdraft or an ongoing line of credit. Rates can be competitive and with interest only charged on the funds used each month, this can be a very affordable solution for many businesses. An Overdraft may be considered as a short-term measure and refinancing the large machinery loan at a later time when the interest rate market presents a more attractive option.
Where the issue emanates from the income side – from slow-paying customers, or if the business has committed to a contract with 60-90+ day invoice payments, Invoice Debtor Financing may offer a solution. This is a specialised form of commercial credit, not available through all banks and lenders.
We have lenders that do provide this credit facility and can source quotes and set-up the process for you. The concept is that the lender pays the business a set percentage of the invoice value at the time of invoicing. The customer pays the full amount to the lender on their terms. When the full amount is received, the lender pays the business the final outstanding amount.
This lending product is individually structured to meet the specific requirements of each business. The business decides how much of each invoice they need asap and how much they can wait to receive. Interest accrues depending on the timing and the invoice values.
For temporary hiccups and unexpected expenses, Secured and Unsecured Business Loans are versatile credit facilities which can suit a wide range of expenditure.
Sourcing Solutions Target Financing
Targeted finance solutions may sound complex. Sourcing these solutions through our experienced brokers can be a streamlined, straightforward process. We listen! Our brokers are interested only in assisting customers by first understanding their requirements.
We will provide you with quotes on the most suitable options and when you agree to proceed, we work with our lenders to arrange the financing. If refinance of machinery loans does not appear to be a viable, affordable solution, think outside the square and speak with Jade about alternatives.
To discuss targeted credit solutions as alternatives to refinancing equipment loans, contact Jade Equipment Finance 1300 000 003.
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.
