When to start a refinancing, and how long it takes.
The single most valuable decision in a refinancing is made before any lender is approached: when to begin. Start with time in hand and you run a real process from strength. Start late, into a market everyone else is hitting at once, and you refinance because the clock ran out rather than because the terms were good. This guide sets out the runway rule and the reasoning behind it, what proximity to maturity actually costs, the week-by-week shape of a process, and where an extend-and-amend beats a full refinancing.
What happens when a term loan matures?
On the maturity date, whatever is still outstanding falls due in full. An amortising loan leaves its final instalment or balloon; a bullet facility leaves the whole principal. There is no automatic renewal and no notice period beyond what the documents give you: the debt is simply repayable, and anything still owed after that date is owed on demand. Maturity resolves in one of four ways, and every one of them is better arranged in advance. You repay from cash. You refinance with the incumbent, which is usually presented as a routine renewal but is in substance a new credit decision at today’s pricing, on today’s numbers. You refinance in the wider market. Or you agree an extension before the date arrives.
The fifth outcome is the one nobody plans: the date arrives with none of the four arranged. A solvent business that simply ran out of calendar is suddenly negotiating a short extension from a position of no alternatives, at whatever price restores the lender’s patience. The public record suggests this is not rare — our own charge-register work found thousands of UK companies still carrying security past the estimated end of their refinancing window, which is what an unarranged maturity looks like from the outside. The rest of this guide exists to keep you out of that cohort: the refi wall, counted shows the scale of it.
Expect the incumbent’s renewal conversation to start three to six months out, on the incumbent’s terms. Treating that letter as the beginning of your process is how a maturity gets repriced quietly; treating the maturity date as a fixed event you plan backwards from — the habit this guide builds — is how it gets repriced competitively.
Begin twelve to eighteen months before maturity.
For anything other than a vanilla bank renewal, the convention is to start a refinancing twelve to eighteen months before the facility matures. The number sounds generous until you decompose it. A properly run competitive process takes roughly twelve to sixteen weeks from mandate to money, and that assumes clean numbers and a finance team with the capacity to carry a diligence load alongside the day job. Before the process even begins, you want a clean set of year-end accounts to lead with, so the sensible window is to have the mandate live around your financial year-end and the process running through the following months.
The eighteen-month end of the range is not padding. It buys the ability to test two or three structures rather than take the first that clears, to hold a credible alternative live until terms are firm, and to absorb the two predictable ways a timetable slips: slow answers on diligence, and numbers that move mid-flight. The runway is the margin that keeps a normal deal from becoming a rushed one.
The tell that you have left it too late is when the incumbent becomes the only realistic option. A lender that knows your maturity is six weeks away has every reason to let the clock do its negotiating. The runway is what lets you keep your best card, which is the ability to walk.
The nearer the maturity, the weaker the hand.
Refinancing pricing is set by the strength of your position when you go to market, not by the day you happen to sign. Two things decay as a maturity approaches, and both cost real money. The first is competitive tension. A borrower with eighteen months of runway can credibly run several lenders in parallel and walk away from any of them, which is the only mechanism that disciplines margin, fees, leverage and the covenant package. A borrower six weeks from maturity cannot walk, and a lender prices that knowledge in. The second is optionality on structure and leverage. With time in hand you can ask for a covenant-lite package, push for a longer tenor, or size the raise off a good year rather than a defensive one. Against the clock, you take what completes.
This is why the covenant headroom you carry today is the headroom you present to the next lender. A clean trailing twelve months, room against your current covenants and a maturity comfortably in the future are what let you set the terms of the auction rather than accept them. Wait until performance has wobbled or the maturity is close and it is the same business negotiating a worse deal.
The macro backdrop sharpens the point rather than driving it. Borrowers who fixed cheap money in 2020–21 are refinancing into a materially higher-rate world: the Bank of England’s effective interest rate on new loans to smaller businesses stood at 6.11% in March 2026, against a Bank Rate of 3.75%. That step-up in the base cost of credit is coming whatever you do, so rather than a reason to wait for a better market it is a reason to control the one variable you can, which is the strength of your hand when you negotiate.
Twelve to sixteen weeks, in four movements.
A clean refinancing runs twelve to sixteen weeks from engagement to money in the account, assuming nothing breaks. The first three to four weeks go on preparation: building the model, drafting the information memorandum and standing up the data room. Lender marketing and first meetings take another three to four weeks. You then give credible lenders four to five weeks to do their work and come back with firm indicative terms. Pick a lender, sign a term sheet, and legals plus diligence take a further four to six weeks to close. A well-prepared borrower closes at the fast end; a deal with heavy diligence or a moving forecast can run past five months.
Two features of that shape matter for planning backwards from a maturity date. First, the honest variable is you. Processes slip when management is slow on diligence or the numbers move, not because the market is slow, so the finance function needs real capacity through the live weeks. Second, most of the value is created early, in framing the ask and choosing whom to invite, and late, in the negotiation and documentation. The middle is largely process discipline. Counting back from maturity, twelve to sixteen weeks of process plus a comfortable buffer for slippage and for signing on your own timetable is exactly where the twelve-to- eighteen-month runway comes from.
A subtle but real cost of leaving it late is competition for attention. The 2026–27 maturity wall is soaking up arranger and fund bandwidth at the larger end of the market, which means a sub-£15m deal that arrives rushed gets less of it. Arriving early, prepared, and running a disciplined process is how a lower-mid-market borrower stays at the front of the queue rather than the back.
A full process is not the only route through a maturity.
There are two clean ways through a maturity, and the runway decides which is available. A full refinancing takes the whole facility to market and replaces it, which is what wins a materially better deal but costs the most time and money. An extend-and-amend keeps the incumbent lender, pushes the maturity out and adjusts a handful of terms, usually for a fee and often with the margin repriced to current market. The amend is faster and cheaper on fees, and it suits a borrower who is broadly happy with the lender and simply needs more runway, or who wants to buy time to refinance properly from a stronger position later.
The catch is that an amend is negotiated with one lender, so the same rule holds: without a credible market alternative in the room, the incumbent has little reason to sharpen its pencil. Started early, an extend-and-amend can be run with the quiet threat of a full process behind it, which keeps the terms honest. Started late, it becomes the only option, and it prices like one. The best use of the amend is a deliberate one. Extend now to reset the clock, then run a real refinancing from strength once the trailing numbers and the maturity profile support it.
For borrowers refinancing a Covid-era facility, one route is worth naming. The Coronavirus Business Interruption Loan Scheme and its sister schemes were written on terms of up to six years, so their final maturities land across 2026 and 2027. The government’s Growth Guarantee Scheme, the successor to the Recovery Loan Scheme, was extended to 31 March 2030 and can be used to refinance an existing CBILS or Recovery Loan Scheme facility, treated as a new application subject to the lender’s criteria. It carries a 70% government-backed guarantee on facilities up to £2m, which can make a bank more comfortable on a credit it would otherwise decline. For a £3–15m borrower it is rarely the whole answer, but it can be a useful component of the structure, and it is worth putting on the table when the numbers fit.
Check the exit cost before you time the entry.
Refinancing early only makes sense once you know what leaving the current facility costs, and that is set entirely by the terms you signed last time. On most bank facilities you can prepay a term loan at par and redraw a revolving facility freely within its term, so an early exit is close to costless. Fund debt is different. A unitranche or other direct-lending facility typically carries call protection in the early years, because the lender priced its return over an expected hold: a non-call period during which you cannot prepay at all, then a prepayment premium that steps down over time, and occasionally a make-whole that compensates the lender for the interest it would have earned. That protection can turn a keen headline margin into the dearer deal if you expect to exit early.
Hedging sits alongside this. Almost all leveraged and mid-market debt is floating, priced over SONIA, and lenders often require you to hedge a portion of the drawn term debt with a cap or a swap. There is no interest-rate break cost on a floating loan itself, but if you have fixed with a swap you may face a break cost on unwinding it, and that cost moves with rates and can be material. A cap, which sets a ceiling for an upfront premium and lets you benefit if rates fall, does not carry that unwind risk, which is one reason it is the sensible default for a borrower who may refinance before the debt fully runs off.
The practical discipline is to design the exit at the point of entry. On the next facility, push for call protection to fall away sooner, or for a carve-out that lets you prepay at par on a change of control, and hedge only the amortising debt you are confident you will carry. Timing a refinancing is a calendar problem; the break cost and the call protection are the price of getting the calendar wrong, and both are negotiable before you sign, not after.
Work backwards from the maturity date.
The whole of this guide reduces to one habit: treat your maturity date as the fixed point and plan backwards from it. Take the maturity, subtract the twelve-to-sixteen-week process, add a buffer for slippage and for the fact that a good set of year-end accounts makes a stronger opening than mid-year management figures, and the mandate wants to be live twelve to eighteen months out. That single calculation is why the runway rule holds, and it is knowable the moment you sign a facility rather than something to work out under pressure years later.
A borrower does not always hold, from memory, exactly when each facility matures or when the next in the group falls due, and the answer is often reconstructable from the public record: the charges a company has registered against it carry the shape of its debt and its likely renewal dates. Whatever the source, the discipline is the same. Fix the date, count back, and start the conversation while you still have options rather than when the incumbent is the only buyer of your problem.
Waiting purely to time a fall in rates is a separate temptation, and usually a mistake: you are taking a market call you cannot reliably win to save a margin you could hedge, and every month you wait toward the maturity weakens your hand. If your facility matures inside eighteen months, the runway rule points one way. Start the process now, keep your options open, and build the flexibility to reprice later, through prepayment rights and an accordion, into the terms you sign rather than into the timing of when you sign them.
The best time to talk is early.
If a facility on your book matures inside the next eighteen months, the first conversation is where we tell you plainly whether a process is worth running, whether an extend-and-amend is the better route, and how the dates should fall. It is confidential and without obligation, and it costs nothing to have it early.