Refinancing existing business debt with the Growth Guarantee Scheme — including pandemic-era loans such as Bounce Back or CBILS facilities — may be possible in some circumstances, but it is not automatic. It depends on the accredited lender, the scheme rules and your existing debt. Refinancing restructures debt rather than reducing it, so compare the total cost of the new facility (including any early-repayment charges on your current debt) before proceeding.
Key takeaways
- Refinancing may be possible under the scheme, subject to rules and lender policy.
- It can include pandemic-era debt in some cases — raise it with an accredited lender.
- Refinancing restructures debt; it does not write any off — you remain fully liable.
- Check early-repayment charges on your existing facility first.
- A longer term can ease cash flow but may increase total interest.
- Compare the total cost of the new facility before deciding.
Many established businesses carry debt taken on in earlier years — including pandemic-era facilities — and wonder whether the Growth Guarantee Scheme can help them refinance onto more manageable terms. The answer is a qualified yes: refinancing may be possible in some circumstances, but it depends on the lender, the scheme rules and the nature of your existing debt, and it needs careful comparison to make sure it genuinely improves your position. This guide explains when refinancing is possible, the potential benefits, and what to weigh before proceeding.
Is refinancing allowed under the scheme?
Refinancing existing debt with the Growth Guarantee Scheme may be possible in some circumstances, depending on the accredited lender and the scheme rules. It is not an automatic right, and permitted uses are defined by the scheme and each lender’s policy. The practical step is to discuss your specific intention directly with an accredited lender, who can tell you whether your particular debt and circumstances qualify.
Refinancing pandemic-era debt
A common scenario is a business looking to refinance legacy debt taken on during the pandemic — such as a Bounce Back Loan or a CBILS facility. Refinancing this kind of debt may be possible in some cases, subject to the scheme rules and the lender’s assessment. With many businesses now managing such legacy borrowing, it is an increasingly relevant question, so it is worth raising directly with accredited lenders to understand your options.
Why refinance?
Refinancing can serve several sensible purposes for an established business:
- Consolidation — combining multiple debts into a single, more manageable facility.
- Cash-flow relief — restructuring repayments to ease monthly pressure.
- Better-fitting terms — moving to terms that suit the business as it has changed.
The goal should always be to leave the business genuinely better off — not simply to defer a problem.
What refinancing does not do
It is important to be clear: refinancing restructures debt; it does not write any off. You remain fully liable for the amount borrowed plus interest. The aim is more manageable or cheaper terms, or simpler administration — not a reduction in the principal you owe. As with all scheme finance, the government guarantee protects the lender, not you, and does not reduce your liability.
Refinancing is not debt forgiveness. If you’re struggling to repay, refinancing onto a longer term may ease monthly pressure but can increase the total interest paid — make sure the new deal genuinely improves your position.
Counting the true cost
Before refinancing, compare the total cost of the new facility against your existing debt. Two things are easy to overlook:
- Early-repayment charges on your existing facility — settling early may trigger a cost.
- Arrangement fees and the rate on the new facility — the guarantee improves access, not price.
A longer term can reduce monthly repayments and help cash flow, but it usually increases the total interest paid because you borrow for longer. Weigh cash-flow relief against overall cost, and only refinance if you come out ahead.
Worked example
An established retailer is juggling three separate facilities with different rates and end dates, which is straining cash flow and hard to manage. An accredited lender agrees to refinance them into a single scheme-backed term loan with one monthly repayment over a sensible term. After checking that the early-repayment charges on the old facilities are modest and that the new total cost is acceptable, the retailer consolidates — simplifying administration and easing monthly pressure. The debt isn’t reduced, but it is far more manageable, and the business is better placed to trade and grow.
How to refinance under the scheme
- List your existing debts, their rates, terms and any early-repayment charges.
- Speak to accredited lenders (or a broker) about whether refinancing is permitted for your situation.
- Prepare recent accounts, management figures and details of the debt.
- Compare the total cost of the new facility against keeping your current debt.
- Proceed only if refinancing genuinely improves cost, cash flow or manageability.
The bottom line
The Growth Guarantee Scheme may allow you to refinance existing business debt — including some pandemic-era loans — but it depends on the lender and scheme rules, and it restructures rather than reduces what you owe. Used well, refinancing can consolidate debt, ease cash flow and simplify management; used carelessly, it can increase total cost. Check early-repayment charges, compare the total cost, and speak to accredited lenders or a broker to decide whether refinancing leaves your business better off.
Frequently asked questions
Can I refinance existing debt with the Growth Guarantee Scheme?
Refinancing may be possible in some circumstances, depending on the accredited lender, the scheme rules and the nature of the existing debt. It is not automatic, so you should discuss your specific intention with the lender, as permitted uses are defined by the scheme and the lender’s policy.
Can I refinance a Bounce Back Loan or CBILS loan?
Refinancing pandemic-era debt such as a Bounce Back Loan or CBILS facility may be possible in some cases, subject to the scheme rules and the lender’s assessment. It is increasingly relevant for businesses managing legacy debt, so raise it directly with an accredited lender.
Why would I refinance existing debt?
Common reasons include consolidating multiple debts into one manageable facility, improving cash flow by restructuring repayments, or moving to terms that better suit the business. Refinancing should reduce strain or cost overall, not simply defer a problem.
Does refinancing reduce what I owe?
No. Refinancing restructures debt; it does not write any off. You remain fully liable for the amount borrowed plus interest. The aim is more manageable or cheaper terms, not a reduction in the principal you owe.
Is refinancing under the scheme cheaper?
Not necessarily. The guarantee improves access rather than guaranteeing a lower rate, and refinancing has its own costs. Compare the total cost of the new facility against your existing debt, including any fees and early-repayment charges, before proceeding.
Are there early-repayment charges on my existing debt?
There may be, depending on your current facility. Before refinancing, check whether settling early triggers a charge, as this affects whether refinancing makes financial sense. Factor any charge into your comparison.
Will refinancing improve my cash flow?
It can, if the new facility spreads repayments over a longer term or consolidates several debts into one lower combined payment. Bear in mind that a longer term may increase total interest paid, so weigh cash-flow relief against overall cost.
Does refinancing affect my credit profile?
Applications may involve credit searches, and the new facility is recorded like any commercial borrowing. Managing the refinanced facility well builds a positive track record, while the application itself is treated as normal lending activity.
Can I consolidate multiple debts into one scheme-backed facility?
Consolidation may be possible depending on the lender and scheme rules. Combining several debts into one facility can simplify management and potentially improve cash flow, but confirm it is permitted and compare the total cost first.
Is approval guaranteed for refinancing?
No. The lender assesses affordability, viability and the purpose within the scheme rules, just as for new borrowing. The guarantee can support a viable application but does not guarantee approval.
Should I refinance or keep my existing facility?
It depends on whether the new terms genuinely improve your position on cost, cash flow or manageability after accounting for fees and any early-repayment charges. If your existing facility is already on good terms, refinancing may not help.
What information do I need to refinance?
Typically recent accounts and management figures, details of the existing debt, bank statements or open-banking access, and the purpose of refinancing. A clear picture of your current borrowing helps the lender assess the application.
Can a broker help me refinance?
Yes. A broker can identify accredited lenders open to refinancing, compare the total cost against your existing debt, and present the application well. Given the comparison involved, broker support can be particularly valuable for refinancing.
What should I avoid when refinancing?
Avoid refinancing simply to defer a problem without improving your position, taking a much longer term that increases total cost without need, or proceeding without checking early-repayment charges. Refinancing should leave you better off overall.
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Get your free quoteThis article is general information, not financial advice. Eligibility, rates and terms vary by lender and your circumstances. The Loans Hub is a finance broker, not a lender.
