Refinance

Refinancing the debt of a mid-sized or large company is a complex process that requires negotiating with the pool of financial institutions under their own terms. Before getting into the requirements and criteria banks apply, it is worth understanding a key distinction: financing is not the same as refinancing.

Initial bank financing is granted to companies seeking resources to grow, invest or expand—typically in periods of stability and with positive prospects. It is, in essence, a bet on the future of the business.

Refinancing, by contrast, involves restructuring existing debts that have become difficult to service—usually due to liquidity stress or financial deterioration. From the bank’s point of view, this completely changes the nature of the risk: while initial financing is granted based on expectations, refinancing is proposed in response to a problem that has already materialised.

For that reason, financial institutions tend to be more cautious and demand additional safeguards, exhaustive viability plans and clear signals of commitment from the company before approving a refinancing. In short: to finance is to back potential; to refinance is to decide whether it is still worth doing so.

Below we examine when banks are willing (or not) to refinance, what they typically require, and how a specialist financial adviser such as Maraz Corporate Finance supports companies throughout the process.

The banking perspective on corporate debt refinancing

For financial institutions, refinancing corporate debt can be a positive alternative to default or bankruptcy. From the banks’ standpoint, refinancing can support the real economy and avoid non-performing exposures—provided there are reasonable assurances of viability.

Banks, however, act with extreme caution. They assess whether the company generates sufficient cash flow to meet its revised obligations, whether leverage is sustainable, and whether the company’s assets can support the transaction. Ultimately, they want to ensure that refinancing increases the probability of repayment and reduces default risk.

In this context, the company must understand that a bank does not refinance out of benevolence, but out of mutual interest: banks refinance when they believe it protects their credit and the continuity of the business.

When are banks willing to refinance a debt?

Banks are typically open to refinancing when there are clear signs the company can recover or improve its situation thanks to the restructuring. Common scenarios include:

  • Liquidity stress but a viable business: where the company faces short-term treasury constraints but its business model remains sound, the bank may refinance to ease near-term payments. Converting short-term debt into long-term debt or renegotiating maturities can rebalance cash flow and restore stability.
  • Financing cost above market: if the current debt carries very high interest compared to prevailing market rates, refinancing at lower rates can benefit both the company and the bank. A lighter financial burden improves the borrower’s repayment capacity and reduces credit risk.
  • Stress driven by a high concentration of short-term maturities: it becomes clear that the debt was poorly structured from a maturity profile standpoint and, by extending terms, cash flows can service the debt. The company becomes viable simply by lengthening maturities. This is very common when investments have been financed with working-capital lines, generating liquidity pressure.
  • Prevention of imminent insolvency: in critical situations, banks often prefer refinancing over facing an insolvency proceeding. If the company demonstrates it can operate sustainably post-restructuring, the lender may accept longer maturities, lower rates or grace periods to avoid a larger loss.

When are banks not willing to refinance?

There are also scenarios where banks refuse to refinance. The most common reasons are:

  • Lack of shareholder commitment: if owners are not willing to inject new capital or make sacrifices (such as foregoing dividends), the bank will interpret that the company is not aligned with the recovery objective.
  • Uncontrolled increase in debt: refinancing while continuing to incur new obligations or maintaining unnecessary costs sends a negative signal and undermines any prospect of an agreement.

Requirements and conditions banks impose to refinance

A successful refinancing requires meeting a set of financial and strategic requirements. Banks do not only look at numbers; they also look at the company’s attitude and professionalism. Key requirements typically include:

  • A robust viability plan: the banking pool expects a detailed financial plan with realistic projections, key indicators and corrective measures already implemented. The plan must demonstrate the company can generate enough income to service the new debt and that the restructuring is not merely a temporary patch.
  • Cash generation capacity: analysis of future cash flows is central to the decision. Banks calculate ratios such as Net Debt/EBITDA or interest cover to assess sustainability. A company with stable, positive free cash flow that can meet Debt Service will have a higher chance of obtaining refinancing.
  • Security and collateral: lenders assess the quality of the collateral supporting the transaction. They may require additional security, shareholder guarantees or pledges over future receivables. The stronger the risk coverage, the better the terms the bank is likely to offer.
  • Financial covenants: banks often impose financial clauses (covenants) to maintain discipline: leverage limits, minimum coverage ratios, dividend restrictions or transparency undertakings. Compliance with these covenants is key to preserving the agreed terms.
  • Transparency, reliability and communication: trust is essential throughout the process. The bank will expect clear financial information, audited statements and continuous communication. Maintaining an open, fluid dialogue with the bank’s decision-makers conveys professionalism and builds credibility.

Taken together, banks look for demonstrable viability, sufficient cash flow, solid collateral, discipline and transparency. Meeting these five pillars materially increases the chances of success.

How to negotiate with banks

Negotiating a refinancing with banks requires both technical preparation and strategic skill. Key recommendations include:

  1. Prepare an impeccable information pack: the company should present a complete dossier with all relevant information: financial statements, viability plan, repayment schedule, sales evolution, debt structure and collateral. A professional presentation strengthens the bank’s confidence and accelerates its analysis.
  2. Anticipate the creditors’ concerns (the banking pool): putting yourself in the bank’s position is essential. The company should anticipate questions and address them with data. Including sensitivity analysis or alternative scenarios demonstrates rigour and preparedness.
  3. Seek balance: every refinancing involves mutual concessions. The bank may offer longer maturities or lower rates, but will require additional security or shareholder contributions. It is important to define priorities, negotiate with flexibility and keep a long-term view.
  4. Maintain credibility and proactive communication: during negotiations, updating the bank on progress, new contracts or operational improvements reinforces the credibility of the plan. Transparency builds trust and reduces perceived risk.
  5. Use specialised advisers: negotiating directly with multiple banks is technical and delicate. Engaging refinancing specialists such as Maraz Corporate Finance can make a significant difference. Maraz acts as the financial interlocutor, structures the viability plan, coordinates documentation and presents the proposal in the way banks expect. Its experience helps align the company’s interests with creditor requirements effectively.

The role of Maraz Corporate Finance in corporate refinancing

Maraz Corporate Finance is a strategic partner for companies facing refinancing or financial restructuring processes. Its specialist team designs tailored viability plans, prepares the technical documentation banks require and supports the company throughout the negotiation.

Key services Maraz provides to companies seeking to refinance their debt include:

  • Comprehensive financial diagnosis: analysis of the current situation, debt structure, liquidity levels and repayment capacity.
  • Design of the viability plan and refinancing proposal: financial projections and alternative scenarios demonstrating business sustainability.
  • Negotiation with financial institutions: direct engagement with banks to secure favourable terms, reduce financial costs and adjust maturities.
  • Covenant management and post-refinancing follow-up: monitoring the commitments assumed and ongoing support to ensure compliance with the agreement.
  • Financial support after refinancing: once the refinancing is signed and approved, the work does not end. The post-closing phase is critical to ensure the company meets its commitments and maintains the confidence of financial institutions. At this stage, continued advisory and monitoring by Maraz Corporate Finance is highly valuable.

Maraz’s team monitors compliance with financial covenants, periodically reviews the treasury plan and anticipates deviations before they become incidents with the banks. In addition, Maraz acts as the technical interlocutor with banks, facilitating communication, updating financial information and adjusting strategy when market or business conditions change.

This post-refinancing support strengthens the stability of the agreement and reinforces the company’s credibility over the long term. Maraz’s approach combines technical rigour, knowledge of financial markets and a strategic focus on business continuity. The objective is not only to obtain bank approval for the refinancing, but to ensure it becomes a real opportunity to strengthen the company.

Thanks to its experience, Maraz Corporate Finance has helped multiple companies successfully renegotiate debt, improve liquidity and restore solvency. In an environment where the relationship with banks demands precision, professionalism and credibility, having an independent specialist adviser is decisive.

Conclusion: corporate debt refinancing is not an administrative formality, but a strategic process that defines a company’s future. Banks will expect solid plans, verifiable data and genuine commitment before agreeing to restructure a debt. Only when they perceive viability and transparency are they willing to support the company’s recovery.

Meeting refinancing requirements, understanding how to negotiate with banks and relying on corporate finance specialists are decisive factors for success.

Maraz Corporate Finance provides the technical and strategic support required for your company to navigate this process with confidence—turning refinancing into a turning point towards stability and growth.

Javier de Rojas Roca de Togores

Partner – Maraz Corporate Finance