Page 12 - FINANCE PART 2 - 8. Businesses In Difficulty

BUSINESSES IN DIFFICULTY

Refinancing a business

• Refinancing refers to replacing the existing financing

with new financing.

• The new sources of funds are used to pay the existing
debt of the company.

• Refinancing could include, amongst others, increasing

the maximum amount of the facility, changing the forms

of finance used or obtaining finance from a different

source.

• It is important to note that refinancing should only be
undertaken once a complete cost/benefit analysis of all

financing options available was undertaken.

• Under Sources and forms of finance you have already

learned about the various potential sources of funds,

and the role, characteristics, advantages and
disadvantages of each.

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