A manufacturer in Warren called me last week, proud that he’d never missed a loan payment in 8 years. Then I showed him he’d overpaid $127,000 in unnecessary interest because he never refinanced. His face went white. “Nobody told me I could refinance business loans,” he said.
Nobody told him. That’s what kills me.
Here’s the thing – business owners will refinance their home mortgage to save half a percent, but they’ll pay 18% on business loans for years without questioning it. They’ll negotiate with suppliers over pennies but hand thousands to lenders without a fight. Makes no sense.
After 40 years watching this stupidity, I can spot the signs someone needs refinancing from across the room. It’s in their exhausted eyes when they talk about their business. The way they check their phone constantly, dreading the next ACH withdrawal. The defensive tone when loans come up in conversation.
If any of this sounds familiar, you’re probably overpaying. By a lot.
Your payment shouldn’t feel like assault
You know that sick feeling when the daily ACH hits your account? That punch in the gut watching $1,000 or more disappear every morning before you’ve even had coffee? If money’s leaving your account daily, you’re not using normal business financing. You’re getting legally robbed.
Merchant cash advances are the worst offenders. They sell it as “convenient” and “fast” but what they don’t mention is you’re paying 40-75% annually when you do the actual math. I had a Detroit restaurant owner paying $1,400 daily. That’s $42,000 monthly for a $200,000 advance. We refinanced him to a traditional loan at $18,000 monthly. Same debt, saved $24,000 per month.
Per. Damn. Month.
Here’s a simple test: Take your total payments and divide by what you borrowed. If that number is over 1.15 for a one-year loan, you’re getting screwed. Most merchant cash advances I see are 1.35 to 1.5. That’s not a factor rate – that’s theft with paperwork.
The worst part? These predatory lenders know exactly what they’re doing. They prey on desperate business owners who need money fast, then trap them in payment cycles that guarantee they’ll need more money fast. It’s a deliberate debt spiral, and it pisses me off every time I see it.
When multiple loans become a circus act
Got more than three business loans? You’re not running a business anymore – you’re running a debt juggling act that happens to sell something on the side.
I met with a Grand Rapids distributor last month who had five different loans. Five different payment dates. Five different amounts. Five different contact people when something goes wrong. He spent more time managing debt than managing sales. That’s not a business, it’s a nightmare with a tax ID number.
But here’s what really scares me – the cross-default clauses. Most business loans have them buried somewhere around page 47 of your agreement. Default on Loan A, and Loan B can immediately call their full balance due. Even if you’ve never missed a payment to Loan B. Even if you’re current. One domino falls, they all fall.
Saw this destroy a good business last year. Missed one $3,000 payment during a slow month. Within 10 days, all five lenders were calling loans. Nearly lost everything over what should have been a minor hiccup. We did an emergency refinance into one loan, saved the business, but the stress nearly killed the owner.
Business loan consolidation isn’t just about simplification. It’s about survival. One payment, one date, one contact. Your blood pressure will thank you.
Your rate is from another era
Pull out your loan documents right now. What rate are you paying? If you got that loan more than two years ago and haven’t refinanced, you’re overpaying. Period.
I just helped a Lansing manufacturer refinance from 12% to 8%. His loan was from 2019. Nothing changed about his business except it got stronger. Better revenue, better credit, better everything. But he kept paying 2019 rates in 2024 because “I’ve always been with this bank.”
Your bank doesn’t give loyalty discounts. They count on your loyalty to keep overcharging you. They make their best margins on customers who never shop around, never question rates, never push back. You’re subsidizing the deals they give to new customers to steal them from other banks.
That manufacturer I mentioned? Saving $2,100 monthly now. His old bank suddenly could match the rate – after he’d already overpaid for four years. Funny how that works.
The market has moved. Rates have changed. Your creditworthiness has probably improved. If you’re paying the same rate you got three years ago, you’re leaving money on the table. Money you earned. Money you need.
When terms don’t match your reality
Your business has busy seasons and slow seasons, but your loan payment is the same every month. Sound familiar? That’s like wearing a wool coat in summer and shorts in winter. It’s stupid, but that’s how most loans are structured.
I worked with a Traverse City resort that was drowning in winter payments they couldn’t afford, then swimming in cash all summer. We refinanced to seasonal payments – 80% of their annual payment happens May through October when they actually have money. 20% in the dead winter months. Same total payment, just timed to when they can actually pay it.
Or maybe you’ve got a balloon payment coming. That massive lump sum due soon that you definitely don’t have saved. Hope is not a strategy, but that’s what most businesses do – hope they’ll figure it out when it comes due.
One construction company had a $200,000 balloon payment due in 4 months. Had maybe $50,000 saved. Could see disaster coming but kept hoping for a miracle. We refinanced the entire loan, eliminated the balloon, actually lowered their monthly payments. Crisis averted because they acted instead of hoped.
Your debt is eating your future
If more than 40% of your gross profit goes to debt service, you’re not growing. You’re treading water. Every opportunity that comes along, you have to pass. Every investment in growth, you can’t make. Every chance to get ahead, you’re too broke to take.
I see this constantly – profitable businesses that can’t grow because debt service eats everything. They’re successful on paper but struggling in reality. Making money but never having money. It’s exhausting and demoralizing.
Small business loan refinancing can free up 20-30% of your cash flow overnight. That’s the difference between surviving and thriving. That’s a new employee who could double your sales. That’s marketing that brings in new customers. That’s equipment that makes you more efficient.
Every dollar you overpay in interest is a dollar stolen from your future. That $2,000 monthly you’re overpaying? Over five years that’s $120,000. That’s a house down payment. That’s college tuition. That’s retirement security. And you’re handing it to a lender because you didn’t know you could refinance.
Time to stop the bleeding
Look, I get it. You’re busy running a business. Refinancing sounds like another hassle you don’t have time for. But every month you wait costs real money.
Start with simple math. Add up all your business debt payments. Calculate the effective interest rate (total payments divided by amount borrowed). Count how many different loans you’re juggling. Calculate what percentage of profit goes to debt service.
If any of those numbers make you sick, you need refinancing. Yesterday.
The process isn’t as hard as you think. Banks want good loans on their books. If you’ve been making payments, even expensive ones, you’re proven. That payment history, painful as it’s been, actually helps you qualify for better terms.
Not everyone qualifies for refinancing. If your business is failing, if you’ve defaulted recently, if revenue crashed – might be too late. But if you’re stable? If you’re making payments but they’re killing you? You’ve got options.
Good businesses get trapped in bad loans all the time. Not because they’re bad at business, but because they don’t know they can escape. They think business loans are permanent. They think the terms they got are the terms they’re stuck with. They think refinancing is only for real estate.
Wrong on all counts.
Michigan Business Advocates specializes in refinancing bad business debt. We know which lenders will take on challenged loans. We know how to package your application to show strength despite struggles. We know what terms are actually possible versus what your current lender claims.
Call us at (248) 957-0300. Let’s see how much you’re overpaying and what we can do about it.
The bottom line is simple – if you recognize any of these five signs, you’re overdue for refinancing. Every month you wait is money gone forever. Money you worked for. Money you earned. Money some lender is taking because you don’t know you have options.
You have options. Use them before it’s too late.
