Refinancing for the self-employed: reduce fixed costs and increase liquidity
03.07.2025
10
Minutes
Katrin Straub
Managing Director at nextsure
Are high monthly loan instalments putting a strain on your cash flow as a self-employed person? A well-planned refinancing can reduce your fixed costs by up to 30 per cent. This article shows you how to reorganise your finances in just a few steps and efficiently pay off expensive existing loans.
The topic in brief and concise terms
Debt restructuring can reduce monthly instalments by up to 30 per cent and consolidate several loans into a single one.
Important prerequisites are at least two years of self-employment and a positive credit check (SCHUFA).
The prepayment compensation for the old loan must not exceed the interest savings from the new loan.
Precisely analyse the financial situation
The first step to successful refinancing is a complete review of your finances. List all existing loans with outstanding balance, interest rate and monthly instalment. For example, a freelancer pays a total of 750 euros per month for three small loans. Clear documentation is the basis for all further steps.
A current business management report (BWA) is the most important document for banks. It provides information about your profitability and shows stable business performance. Also have the income tax assessments for the last two to three years ready. These documents demonstrate your ability to service the new, lower-cost loan. Careful preparation often shortens the approval process by several weeks. This creates a solid basis for negotiations with potential new lenders.
In four steps to optimised loan terms
A structured process is crucial to securing the best terms. With this approach, you can reach your goal efficiently:
Determine the exact total amount of all loans to be refinanced. Take into account any prepayment penalty, which can amount to up to one per cent of the remaining debt.
Obtain at least three different loan offers in order to compare interest rates and terms. Even an interest rate difference of 0.5 percentage points can mean savings of thousands of euros over the term.
Submit the application in full with all required documents. These include the management accounts, current bank statements and the latest tax assessments.
After approval, the new bank pays off the old loans directly. From that point on, you will have only one instalment to a single creditor, which simplifies your bookkeeping by up to 50 per cent.
By consolidating several loans, you not only improve your terms but also your SCHUFA score. How you consolidate several loans is an important part of the process.
Requirements for a successful debt restructuring
Banks scrutinise self-employed people more closely than employees, as their income fluctuates more. A positive credit rating is therefore the most important requirement for loan approval. A negative SCHUFA entry almost always leads to rejection. The majority of lenders require at least two years of self-employment. You can prove this with your tax assessments and continuous management accounts. The following documents are usually required:
Current management accounts
Income tax assessments for the last two to three years
Income and expenditure statement (EÜR)
Valid ID card or passport
Bank statements for the last three months
Contract documents for the loans to be refinanced
Our expert tip: If collateral such as a property or a capital life insurance policy is available, this significantly increases your chances of top conditions. A loan despite negative SCHUFA is only possible in exceptional circumstances.
Realise interest savings and long-term savings potential
The main objective of debt restructuring is to reduce the interest burden. Even a seemingly small difference in the interest rate has a huge impact. Reducing the interest rate from seven per cent to four per cent on a remaining debt of 30,000 euros saves more than 2,500 euros in interest costs over a term of five years. The monthly instalment also falls by more than 40 euros.
Interest rates for instalment loans are often significantly lower than those for an overdraft facility. Many self-employed people use the expensive overdraft to bridge short-term gaps, which often comes with interest rates of over twelve per cent. Refinancing the overdraft into an instalment loan can reduce interest costs by more than 60 per cent. A business loan for freelancers can be a suitable solution here.
Weigh up risks and avoid costly mistakes
Debt restructuring is not always the best solution. A key risk is the early repayment charge. This fee is charged by the old bank for the loss of interest income. For personal instalment loans, it is legally capped at a maximum of one per cent of the outstanding balance; if the remaining term is less than one year, it is capped at 0.5 per cent. If this fee exceeds the interest savings, switching is not worthwhile.
Also pay attention to the overall term of the new loan. A lower monthly instalment due to a longer term can ultimately lead to higher total costs. Therefore, always compare the total interest expense over the full term. Sometimes debt restructuring to avoid insolvency may also be a last resort. Weigh up all factors carefully before making a decision.
Expert tip: Take advantage of the tax benefits of refinancing
What many self-employed people do not know: the interest on a business loan is tax-deductible. This also applies to the interest on a refinancing loan, provided it is used to finance the business. The interest costs reduce your taxable profit and therefore lower your tax burden. Assuming a tax rate of 30 per cent, this means an effective saving of 300 euros for every 1,000 euros of interest paid.
The costs of the refinancing itself can also often be claimed as business expenses. These include, for example, processing fees or notary fees. Accurate documentation of all expenses is crucial here. Speak with your tax adviser to make full use of all tax benefits and further optimise your financial planning. This is particularly relevant for artists with irregular income.
Debt restructuring offers significant opportunities, but also entails risks. nextsure supports you as a digital insurance portal in analysing your financial situation. Have your insurance situation and financing structure reviewed free of charge and receive concrete suggestions for improvement. This way, you can make a well-informed decision for your financial future.
More useful links
Statista offers statistics on loans to companies and the self-employed.
Federal Statistical Office provides information on business registrations and insolvencies in Germany.
Deutsche Bundesbank provides detailed credit data as part of the ANACREDIT survey.
Munich Chamber of Industry and Commerce offers a guide to liquidity planning in crisis management.
Cologne Institute for Economic Research publishes a report on the situation of the self-employed in Germany.
German Bundestag offers current brief updates, which may also cover economic topics.
KfW provides information and analyses on the development of company start-ups in Germany.
Federal Ministry for Economic Affairs and Climate Action offers a comprehensive dossier on SME financing.
Federal Statistical Office publishes a publication on financial resources for small and medium-sized enterprises (SMEs).
FAQ
Which documents are most important for refinancing as a self-employed person?
Most important are up-to-date management accounts (BWA), the income tax assessments for the last two to three years, and a clean SCHUFA report. These documents demonstrate your creditworthiness and the financial stability of your company.
Is refinancing also worthwhile for small loan amounts?
Yes, even with smaller amounts, refinancing can be worthwhile, especially if you have several small loans or an expensive overdraft facility. Consolidating them improves clarity and can even lead to a noticeable reduction in your monthly repayment burden, even with smaller sums.
What happens if my application for refinancing is declined?
A refusal is usually due to poor creditworthiness or insufficient proof of your income. Analyse the reasons, improve your creditworthiness if necessary by making payments on time, and try again after a few months or look into alternative financing options.
Can I make extra repayments during the refinancing?
Most modern consolidation loans offer the option of making free additional repayments. When choosing your new loan, look out for this option. It allows you to repay the loan more quickly when business is good, and thus save additional interest costs.
