What is a complete business refinance?
It’s a single property-secured loan big enough to clear every debt that’s putting the business at risk. At settlement, the lender pays each creditor directly: IRD, suppliers, short-term lenders, private lenders, card providers. The old debts are gone, and what’s left is one loan secured on property, with one repayment and a plan for how it’s eventually repaid.
For a business that’s been fighting fires on several fronts, the difference can be dramatic. Instead of deciding each week which creditor to pay and which to put off, the owner can get back to running the business.
When a complete refinance makes sense
It tends to fit when:
- several creditors are pressing at once, especially if one has issued a statutory demand;
- IRD arrears are large and penalties and interest are growing;
- short-term loans with heavy repayments are draining weekly cash flow;
- the business itself is viable, meaning it can cover its running costs and a sensible loan repayment once the old debts are gone;
- there’s equity in New Zealand property owned by the business owners or a willing supporting party.
It’s less suitable if the business is still losing money every month with no change in sight. In that case a refinance delays the problem rather than solving it, and we’ll say so.
The refinance vs handing over control
Many business owners who could refinance don’t know it’s possible. They get advice to “talk to an insolvency practitioner”, and the conversation moves quickly toward liquidation, voluntary administration or a formal compromise with creditors. Those processes have their place. But it’s worth understanding what each one means before you sign anything.
| Complete refinance | Formal insolvency process | |
|---|---|---|
| Who runs the business | You | A liquidator or administrator, or you under strict terms |
| Who gets paid | Every creditor, in full | Creditors by statutory priority, often in part |
| Fees | Loan costs, priced on your circumstances | Practitioner fees, paid from company assets first |
| The business afterwards | Trades on | Often sold or closed |
| Your reputation with suppliers | Intact, they were paid | Damaged, especially if they were unpaid |
| What it uses | Equity in property | The company’s assets |
We explain the trade-offs in more depth in Don’t restructure until you’ve seen this.
What a complete refinance involves
- A full list of debts. Every creditor, balance and status, including IRD’s current figure and any court or demand paperwork.
- Security. The property or properties available, what’s owed on them now, and who owns them.
- A short conversation about the cause. What went wrong, and why the business can carry one repayment now.
- Valuation and payout figures. The lender arranges a valuation; each creditor provides a payout figure.
- Settlement. The lender pays every creditor directly. In some cases funding is possible within 24 hours of approval.
- The exit. Typically refinancing to a bank once the file is clean, a planned property sale, or repayment from trading.
Example scenario
Example scenario — for illustration only. An Auckland joinery business owed IRD about $180,000, had two creditors threatening statutory demands, a short-term loan with weekly repayments and a maxed-out card. The accountant suggested a liquidator. The two directors owned a North Shore home with a first mortgage and substantial equity. A second mortgage paid out all five debts. The joinery kept its staff and its contracts, and the directors began working toward a bank refinance.
Getting started
List what you owe and what property is available, even roughly. Start an enquiry, and a lending specialist will call you back to see if a complete refinance is realistic.