Cropped portrait orientation photograph headshot close-up view of Kiersten Russell, a smiling woman with light faded gray colored hair, bright blue eyes, and a nose piercing; She is wearing a black collared shirt and is looking directly at the camera
Kiersten Russell
AVP, Business Development Strategist, Northrim Bank
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FINANCIAL SERVICES & CONTRACTORS
When to Refinance Business Debt as a Contractor
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unning a contracting business means managing projects, crews, equipment, and finances. One key financial decision that can improve your bottom line is refinancing your business debt at the right time. But be cautious: refinancing too early or too late can cost your business more in the long run. Here are important elements to consider.

What Is Business Debt Refinancing?
Refinancing business debt means replacing an existing loan, or multiple loans, with a new one—ideally with better terms. This might include lower interest rates, lower monthly payments, a longer repayment term, or consolidating multiple debts into one payment.

For contractors, refinancing can offer the breathing room needed to manage slow pay cycles, fund new equipment, or take on larger projects.

Signs It Might Be Time to Refinance
Your interest rates are high. If you took out a loan when interest rates were higher, you might be paying more than you should. If your personal credit score has improved or rates have dropped, refinancing could lower your costs.

You have multiple loans or payments. Are you juggling equipment loans, credit cards, and lines of credit? Refinancing can consolidate them into one manageable payment, helping simplify your cash flow and reduce the chance of missing payments.

Your cash flow is tight. Many contractors experience fluctuating income depending on job schedules and seasonality. Refinancing to lower your monthly payments, even if it means extending your loan term, can free up working capital.

You need funds for growth. If your current debt is preventing you from taking on new jobs or purchasing better equipment, refinancing can sometimes unlock equity or reduce obligations to make room for new borrowing.

Your business has become more stable. If your business has grown, your financials are stronger, and you’ve built a good payment history, banks may be willing to offer better terms than when you first borrowed.

When You Shouldn’t Refinance
You’re close to paying off the original loan. Extending the term might cost more in interest over time.

You’ll face high prepayment penalties. Check your original loan agreement for any fees.

You plan to exit or sell soon. Taking on new debt or extending repayment may not make sense if you’re winding down.

How to Prepare
Before approaching your bank or lender, it’s a good idea to review your current loan terms and payoff balance, check your personal credit scores, organize recent financial statements (balance sheet, income statement, tax returns), and be ready to explain why you’re refinancing and what you plan to achieve.

A strong relationship with your banker can help you explore flexible options, such as extending repayment, receiving a lower interest rate, or accessing a revolving line of credit that grows with your business. Consult your banker about what is the best option for your unique operation. The right refinancing move could help lay the financial foundation for your next big project.

Kiersten Russell has been in the banking industry for more than fifteen years and currently holds the role of AVP, Business Development Strategist at Northrim Bank. She has served in a variety of roles at the bank, including lead teller, universal banker, loan servicer, credit analyst, commercial loan officer, and, most recently, business development strategist. She earned a bachelor’s degree in business management (2012) and accounting (2020) through the UAF. Russell is on the board of directors for the Associated General Contractors of Alaska and is active on multiple committees.
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