Is it time for your business to refinance?

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With interest rates on the way down, now would be a really good time to have a look at your current finances in case a bit of tweaking is in order.

The Reserve Bank has announced two cuts to official interest rates since the start of May, first reducing the cash rate by 50 basis points on May 1 to 3.75 per cent, and then making a further cut of 25 basis points to 3.25 per cent on June 5.

This is all good news for businesses either wanting to take out new borrowings, or for businesses with existing borrowings wanting to review their current arrangements and perhaps also shop around for a better deal in the financial marketplace.

See your accountant

A good starting point for the process is to make an appointment with your accountant to go over your overall plans and financial goals. You should see or speak to your accountant before the end of the financial year anyway, and with only a few days left before June 30 time is really of the essence. Your accountant should be able to guide you in terms of determining the state of your business' finances as well as your capacity to borrow if required.

See your bank manager of finance broker

Next, make an appointment to see your bank manager or finance broker to discuss your specific needs. If you are looking at refinancing your existing loans, ask whether restructuring your facilities into a new finance package is the best option. Ask about what products are available, the current interest rates on offer, and how easy it would be to switch your facilities over if switching makes sense. The same applies if you are looking at taking out a new finance facility. You will need to provide details of all existing finance facilities in place, your latest financial accounts, and to be well prepared with documentation if you are looking at additional funds to purchase assets such as plant and equipment or property.

This is an excerpt from Business Spectator's new short course on Financing Growth. Click here to read the rest of the article, plus the remaining 9 articles in the course.