Refinancing Existing Debt to Generate Cash Flow


Courtesy of Jennifer Diaz, Vice President, National Account Manager, Wells Fargo Practice Finance

If you’re like most, the very idea of refinancing your debt in the midst of a busy career and home life is enough to give you heart palpitations! But the truth is that if you are carrying debt that is over four years old, you may be paying more interest than is necessary. You might be losing cash flow that could be put to work growing your practice, increasing reserve funds, or simply lowering your monthly overhead. With today’s historically low interest rates, refinancing debt to free up cash flow can be a good business decision. Let’s say you could save approximately $1,500 per month by refinancing your four-year-old practice start-up loan at today’s lower interest rates. What could that additional cash flow mean for your business?

Technology Investment

You might use your new-found funds to leverage the purchase of new dental equipment or office systems that allow you to expand your services and make your practice more competitive. At the same time, you could take advantage of the IRS Section 179 tax deduction for business equipment purchases, making your investment work that much harder.

Retirement Fund ing

Who doesn’t need a little extra income to help boost their retirement account? With discipline, the added cash flow you realize each month from refinancing your debt can work to grow a nest egg for your future retirement. Consult with your CPA or investment advisor for guidance on the ideal investments for your situation.

Accelerated Debt Payoff

Some doctors take advantage of lower interest rates to accelerate their debt reduction program and become a debt free practice more quickly. Let’s face it – nothing increases cash flow like paying off debt!