For Minnesota business owners carrying existing debt, refinancing a business loan is one of the most practical ways to strengthen cash flow, reduce borrowing costs, and realign financing with where your company is actually headed. But refinancing isn't always the right move. The difference between a smart refinance and a costly one comes down to timing, structure, and working with a lender who understands your business — not just your balance sheet.
At Security Bank & Trust Co., we approach refinancing as a strategic conversation. Whether you're running a services company in the Twin Cities, managing a construction operation in Ramsey, or growing a manufacturing business in Greater Minnesota, the goal is the same: make sure your financing supports your next move, not just your last one.
Here's how to evaluate whether refinancing makes sense for your business right now.
Most businesses don't stand still. Revenue grows, operations expand, and your financial profile gets stronger over time. A loan you secured during an earlier stage — maybe when you were just getting off the ground or closing your first acquisition — may have been the right fit then. But it may not reflect the company you've built since.
Refinancing gives you an opportunity to realign your debt with today's reality. Business owners typically start exploring refinancing after a period of consistent performance. Stronger cash flow, improved credit, and a solid track record can open the door to better terms, lower rates, or a more flexible structure.
This often comes up as part of a broader business banking review. Maybe you've accumulated multiple loans and lines of credit over the years. Maybe your original SBA loan served its purpose, but conventional commercial financing would give you more room to operate. Or maybe your monthly payments are eating into capital you'd rather put toward equipment, hiring, or a second location.
Businesses that regularly review their financing with a trusted banking partner tend to be better positioned to act when the numbers make sense. And in a market like Minnesota — where industries like ag, manufacturing, construction, and professional services each have their own cycles — that kind of proactive planning matters.
Refinancing is worth pursuing when it creates a measurable improvement in your financial position. Here are the most common scenarios where it pays off:
Reducing borrowing costs. If interest rates have dropped since you originally closed your loan, or if your business has become significantly more creditworthy, you may qualify for a meaningfully lower rate. On a $500,000 loan, even a 1% rate reduction can save thousands over a five-year term. That's real money back in the business.
Improving monthly cash flow. Refinancing into a structure with lower monthly payments frees up operating capital. That cash can go toward hiring, inventory, technology, or facility upgrades. For growing companies, this flexibility can be the difference between staying on plan and falling behind.
Simplifying your debt structure. It's common for companies to stack up multiple loans, lines of credit, and equipment notes over time. Consolidating into one predictable payment improves visibility and makes financial management more straightforward. Business owners and CFOs spend less time managing due dates and more time managing operations.
Transitioning from SBA financing to conventional lending. SBA loans are an important tool during early growth stages. But once your business demonstrates consistent revenue and strong financials, conventional commercial lending may provide greater flexibility or lower long-term costs. That transition should be evaluated carefully — and it's one of the conversations we have most often with Minnesota business owners at Security Bank.
Refinancing doesn't always make sense, and a good lender will tell you that upfront.
Rates are higher now than when you closed. If current market rates exceed your existing rate, refinancing could increase your total borrowing costs — even if the new structure lowers your monthly payment. Always compare total cost of the loan, not just the payment amount.
Your loan is close to payoff. If you're within a year or two of paying off an existing obligation, the savings from refinancing may not justify the origination fees, closing costs, or time involved in the process.
Prepayment penalties reduce the benefit. Some commercial loans include prepayment penalties of 1–3% of the remaining balance. On a $400,000 loan, that's $4,000 to $12,000 in fees before you even close the new loan. That cost needs to be weighed against projected savings.
Financial performance has softened. Lenders evaluate recent performance when underwriting a refinance. If revenue or profitability has declined, you may not qualify for the terms that would make refinancing worthwhile. In that case, waiting until conditions strengthen is usually the smarter play.
The key is approaching refinancing as a strategic decision, not an automatic one. Sometimes the best move is staying the course until the numbers clearly favor a change.
Choosing the best bank for business in Minnesota often comes down to finding a partner that understands more than just your balance sheet. Refinancing decisions affect cash flow, growth planning, and long-term stability, so they benefit from a relationship-based approach.
At Security Bank & Trust Co., refinancing decisions aren't treated as standalone transactions. They're part of a longer conversation about where your business is headed and what financial structure will best support that path. Our team works directly with Minnesota business owners — from the Twin Cities metro to communities across the state — and decisions are made locally by people who understand the regional economy.
That matters. A relationship-driven community bank can tell you when refinancing makes sense and when it doesn't. We'd rather help you stay in a structure that's working than push a transaction that doesn't serve your goals. Business owners who work closely with their banker tend to revisit financing proactively rather than reactively — and that's where the real value shows up.
If you're preparing for growth, evaluating your debt structure, or just want to know where you stand, our team is ready to have that conversation. You can also explore related guidance in our article on preparing your commercial loan application.
Not sure whether refinancing fits your situation? Talk to a Security Bank business lender — no application required, just a straightforward conversation about your options.
The best time to refinance is when your business is performing well, rates are favorable compared to your current loan, and the projected savings outweigh any associated costs. A strong financial track record gives you the most leverage to negotiate better terms.
Yes. Many Minnesota businesses start with SBA financing during early growth and later transition to conventional commercial lending once they've built consistent revenue and stronger financials. Conventional loans can offer more flexibility and, in some cases, lower long-term costs.
Common costs include origination fees, closing costs, and potential prepayment penalties on your existing loan. These vary by lender and loan type. Before moving forward, ask your lender for a full cost comparison so you can weigh total savings against total expenses.
Compare the total cost of your current loan (remaining interest plus payments) against the total cost of a new loan (interest, fees, closing costs). A lower monthly payment alone doesn't always mean savings — if the rate is higher or the term is longer, you could end up paying more overall.
Local decision-making, direct access to your lender, and guidance that's rooted in understanding your business and the regional economy. At Security Bank, refinancing conversations start with your goals — not a standardized model. That means you get advice tailored to your actual situation, not a one-size-fits-all product.
Minnesota businesses have access to several strong resources when evaluating refinancing decisions alongside their banking partner:
Refinancing a business loan should never be viewed as a quick fix or a purely transactional decision. When approached thoughtfully, it becomes part of a broader strategy to strengthen the financial foundation of a business. The right timing can improve cash flow, reduce costs, and create flexibility that supports continued growth. The wrong timing can add complexity without delivering meaningful benefit.
For many Minnesota companies, the most productive first step is simply a conversation. Reviewing your current structure, discussing future plans, and evaluating potential scenarios can provide clarity on whether refinancing is worth pursuing now or revisiting later.
If you’re considering whether your current financing still fits your business, connecting with a lender who understands your goals can help you evaluate options with confidence. Our team works closely with Minnesota businesses to ensure financing decisions align with long-term growth, not just short-term changes.
You can start that conversation here: Connect with a Business Lender