Aftermarket Accessories Business Refinances $161k Debt | Go For Broker

Business Loans, Refinance, Cash Flow, Commercial Property, Case Study

Discover how Go For Broker helped a NSW aftermarket accessories business refinance $161,000 of debt, cutting monthly repayments from $22,100 to $4,200 - replacing an unsecured facility charging the equivalent of 110% per annum with a second mortgage at 26.76% per annum.

26.76% sounds like a lot for a business loan - until you learn it replaced a facility charging the equivalent of 110% per annum. Rate only means something next to what it's replacing, and this is as clear a case of that as you'll find.

If someone told you a business had refinanced onto a facility charging 26.76% per annum, the instinct is to wince. But the number that actually mattered here wasn't 26.76% - it was 110%, the effective rate on what came before it. Against that, 26.76% wasn't the expensive option. It was the rescue.

First, Why the Banks said No

Every reason the bank gave described a business under pressure - but not a business in genuine trouble.

Repayments had started bouncing. With $22,100 leaving the business every month on the existing facility, cash flow had been squeezed to the point where repayments were no longer landing reliably - exactly the signal a bank's standard process treats as a red flag.

Revenue had dipped. Supply delays from China had temporarily reduced revenue, which meant that, on paper, the business no longer qualified for the amount needed under standard lending metrics.

Neither of these reflected the underlying business - a company turning over millions of dollars a year, trading for two and a half years, with a clean credit file before the existing facility started eating into cash flow.

Our Thinking

This wasn't a bad business - it was a business with a finance problem. The existing lender was taking $22,100 out of the business every month, and the longer that facility stayed in place, the deeper the cash flow hole became. What the business needed was a lender willing to look past a temporary revenue dip to the strength of the business itself.

The Numbers

Before:

Facility Type:Unsecured

Effective annual rate:110% per annum

Monthly Repayment:$22,100

After:

Facility Type:Second Mortgage

Effective annual rate:26.76% per annum

Monthly Repayment:$4,200

Facility Amount:$161,000

Term:12 Months

Purpose:Debt consolidation and working capital

What people miss

26.76% reads as a high rate in isolation, and by bank standards, it is. But nobody refinances out of a good deal - this business was refinancing out of a facility charging the equivalent of 110% per annum, structured in a way that had already started causing missed payments. The relevant question was never "is 26.76% expensive?" It was "is 26.76% better than the 110% currently in place?" Framed that way, the deal isn't a compromise. It's a rescue with room to breathe - four months of capitalised interest built in, on top of the rate cut itself.

The point isn't that one is better

A 26.76% facility is still a private, short-term instrument, not a substitute for cheaper bank lending once the business's financials reflect its true trading strength again. The plan here - clear the expensive debt, use the capitalised-interest period to let the supply chain and revenue normalise, then refinance further down the track - is exactly how a facility like this should be used.

The point isn't that private lending is cheap. It's that "expensive" only means something relative to the alternative actually available - and for this business, the real alternative wasn't a bank rate. It was continuing to bleed $22,100 a month until the bouncing payments became something worse.

The Outcome

• $161,000 second mortgage arranged, paying out the unsecured facility in full

• Monthly repayments cut from $22,100 to $4,200 - almost $18,000 a month returned to the business

• Four months of capitalised interest built in, with no repayments required during that period

• Additional working capital released

• Business given breathing room to recover as the supply chain normalised

Could Your Clients Benefit from a Similar Strategy?

If you're an accountant, adviser, or agency working with a client stuck on an expensive unsecured facility that's quietly draining cash flow, this case shows what's achievable when the real comparison is made - not against an ideal bank rate, but against what the business is actually paying right now. For businesses and SMEs across Australia, a rate that looks high in isolation can still be the rescue, once it's measured against the facility it's replacing.

Whether the underlying pressure is bouncing repayments, a temporary revenue dip from something like a supply chain disruption, or simply too many months of an unsecured lender eating into working capital, a broker with access to non-bank and private lenders - able to structure a refinance around the business's real trading strength, not just its most recent numbers - can cut the bleeding and return meaningful cash flow to the business.

FAQs

Can I refinance an expensive unsecured business loan in Australia? Yes - a broker with access to non-bank and private lenders can often refinance high-cost unsecured debt into a lower-cost, property-secured facility, even where a bank has declined due to a temporary revenue dip.

Why would a 26.76% rate be considered a good outcome? Because rate only means something relative to the alternative. Refinancing out of a facility charging an effective 110% per annum into one charging 26.76% is a substantial saving, even though 26.76% would look high measured against a standard bank rate in isolation.

What if my business is strong but a temporary issue like supply delays is affecting my ability to qualify for finance? Some lenders will assess the underlying strength and trading history of the business rather than a single period of reduced revenue, particularly where there's a clear, temporary cause such as a supply chain disruption.

How much can refinancing an expensive unsecured loan actually save each month? It depends on the original facility's rate and structure, but moving from a high-cost unsecured loan to a lower-cost secured facility can, in some cases, reduce monthly repayments by tens of thousands of dollars, freeing up meaningful cash flow.