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Page written by Ashlyn Brooks. Last reviewed on May 13, 2025. Next review due October 1, 2026.
Refinancing commercial property is a strategic move for businesses and investors looking to reduce financial pressure, unlock capital, or reposition assets for growth. Whether you’re managing a portfolio of rental units, operating from an owned business premises, or developing real estate, refinancing offers a way to improve your financial footing and long-term flexibility.
Here at Swoop, we get it. We know the info overload of commercial finance can feel overwhelming, especially when rates, terms, and lender expectations vary so widely. That’s why this guide was made to cover how commercial refinancing works, why it might be the right move for your business, and what to consider before starting an application. Our goal is to help you understand your options clearly so you can move forward with confidence.
Refinancing a commercial property means replacing your existing mortgage or loan with a new one( ideally under better terms). That could mean a lower interest rate, a longer repayment term, or tapping into your property’s built-up equity.
The new loan pays off the original one, and moving forward, you make repayments under the updated terms. Refinancing can be used to cut costs, raise capital, or restructure debt to better align with your business goals.
Businesses refinance for several reasons, all centered around improving financial efficiency and unlocking liquidity.
Refinancing into a lower interest rate or extending the loan term can reduce your monthly outgoings. This frees up working capital for operating expenses or reinvestment. But even though you may be freeing up stronger day-to-day cash flow, there’s more behind those lower payments—namely, amortization.
When you refinance, you’re effectively resetting your loan’s amortization schedule. That means:
Food for thought before you go all in.
If your property has appreciated or you’ve paid down a significant portion of the original loan, refinancing allows you to pull out some of that equity as cash. You can then use it to fund new projects, expand your portfolio, or invest in business growth.
If you have multiple loans tied to one or more commercial properties, refinancing can help consolidate them into a single loan with one repayment schedule, often with better terms.
Anyone looking for better terms, lower interest, or streamlined payment has something to gain from commercial refinancing. It’s common to see property investors, businesses, and developers go this route.
Investors can refinance to free up capital for new acquisitions, renovate existing properties, or reduce their overall borrowing costs, allowing for better portfolio management.
If you operate from a property your business owns, refinancing can help lower occupancy costs or unlock capital to reinvest in your business. It also adds flexibility if you’re planning renovations or upgrades.
Those managing rental properties or commercial developments can refinance to fund new phases of construction, improve cash flow between projects, or respond to changes in interest rates.
At Swoop, we support a full line of refinancing options for a variety of situations. Here are the four we will look at: fixed-rate, variable rate, interest-only, and cash-out.
A stable option where the interest rate remains the same over the term of the loan. Ideal for borrowers who value predictability and long-term planning.
These loans adjust with market interest rates. They may start lower than fixed-rate loans but carry the risk of rising over time. They suit borrowers who anticipate paying off the loan early or who expect rates to remain stable.
This structure allows borrowers to pay only the interest for a defined period, typically the first few years. It improves cash flow early on but increases long-term repayment obligations.
Here, the new loan is larger than your current balance, and you receive the difference in cash. It’s a common way to access equity for reinvestment, acquisitions, or major capital expenses.
Qualifying for refinancing depends on both the financial health of the business and the performance of the property. Although there’s never a one-size-fits-all, there are a few factors you can anticipate being inspected.
Lenders assess how much you’re borrowing compared to the property’s value. Most require an LTV ratio of 65% – 80%. A lower LTV signals lower risk for the lender.
Both business and personal credit histories are often reviewed. A higher score and a strong payment history can lead to better rates and terms.
Lenders look at the current market value of the property and its income potential. A well-maintained, fully leased property with stable income presents a lower risk.
Your business’s revenue, cash flow, and debt obligations all factor into eligibility. Lenders want confidence that your business can handle the refinanced loan without strain.
In the commercial property space, refinancing and remortgaging are often used interchangeably, but they have subtle distinctions:
Both aim to improve financial conditions, but refinancing may also involve taking out additional capital or restructuring loan terms beyond just rate shopping.
Pros
Cons
If refinancing doesn’t fit your situation, or you need capital faster or more flexibly, these alternatives may be worth exploring:
Short-term financing is used to “bridge” a funding gap, often between selling one property and buying another or while waiting for long-term financing.
A hybrid of debt and equity financing, often used in large development deals. It carries a higher risk and cost but offers flexibility in complex structures.
Ongoing access to funds, similar to a credit card. Best for short-term working capital needs or property improvements rather than full-scale refinancing.
If you’re considering refinancing a commercial property, Swoop can help you explore your options in one place. From fixed-rate mortgages to cash-out refinancing, our platform connects you with lenders that understand your business and property goals.
Register today to check available business loans, compare offers, and see how refinancing could help improve your cash flow, reduce costs, or unlock capital for your next move.
Written by
Ashlyn is a personal finance writer with experience in business and consumer taxes, retirement, and financial services to name a few. She has been published in USA Today, Kiplinger and Investopedia.
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At Swoop we want to make it easy for SMEs to understand the sometimes overwhelming world of business finance and insurance. Our goal is simple – to distill complex topics, unravel jargon, offer transparent and impartial information, and empower businesses to make smart financial decisions with confidence.
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