Business Debt Restructure Calculator

A business carrying debt it can no longer service comfortably has a small number of real options, and all of them involve the same trade: paying less each month in exchange for paying more in total. This calculator makes both halves of that trade visible at once. You enter the facilities you actually hold, each with its balance, rate and years remaining, and the page totals them into the single monthly figure the business is struggling to find. You then model the change, whether that is consolidating everything into one facility at a new rate and term, stretching the term, moving to interest only for a period, or refinancing with fees capitalised so no cash is needed up front. The output is deliberately blunt: the cash freed each month, the extra interest that relief costs over the full term, the break-even month at which the accumulated relief equals the extra cost, and the debt service coverage ratio before and after. Restructuring is a legitimate and often sensible thing to do, particularly where short expensive facilities were used to fund long-lived assets, but it is a cash flow instrument rather than a saving, and the page is built so that nobody can mistake one for the other.

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Restructuring Buys Time, And Time Has A Price

Every restructure on this page does the same thing: it moves debt further into the future so that less of it has to be paid this month. That is genuinely valuable when a business needs to get through a period, and it is not something to feel bad about. It is also never free, and the size of the price is usually a surprise.

On the worked example the relief is $4,188.60 a month, which is close to half the current repayment. The price is $98,673.28 of extra interest and fees. Both numbers are real and both should be on the table when the decision is made.

Worked Example: Three Facilities Into One

The business holds a $180,000.00 term loan at 9.2% with six years to run, $85,000.00 of equipment finance at 11.5% over three years, and a $45,000.00 trade facility at 14.9% over two. Together that is $310,000.00 of debt costing $8,245.21 a month, with $78,120.33 of interest still to pay.

Consolidating into a single facility at 9.5% over ten years, with $3,500.00 of fees capitalised, gives a new balance of $313,500.00 and a repayment of $4,056.61.

Note what happened to the rate. The new 9.5% is lower than two of the three facilities it replaced. Total interest and fees still rise from $78,120.33 to $176,793.61, because the driver is not the rate, it is the term. The equipment finance had three years to run and now has ten.

The Break-Even Month Is The Real Test

$98,673.28 of extra cost divided by $4,188.60 of monthly relief gives 23.6 months. That is the honest test of whether this restructure is a good idea.

If the freed cash is doing something specific within about two years, funding a piece of equipment that lifts capacity, rebuilding a cash buffer, carrying the business through a known trough, then the restructure has paid for itself and the remaining interest is the cost of a decision that worked.

If, twenty-four months from now, the cash has quietly absorbed into ordinary trading and nothing structural has changed, the business has spent $98,673.28 to arrive at the same position with a longer loan and fewer options. That is the outcome worth guarding against, and the way to guard against it is to write down what the cash is for before signing.

Coverage Improves Without The Debt Changing

Debt service coverage on the current structure is $120,000.00 of EBITDA against $98,942.52 of annual service, which is 1.21. Most lenders want to see at least 1.25, so the business is technically below covenant on a common benchmark.

After the restructure, service falls to $48,679.32 and the ratio rises to 2.47. That is a dramatic improvement and it is entirely real: the business genuinely does have more headroom each month.

It is also worth being clear-eyed about what did not happen. The business owes exactly what it owed before, $310,000.00, plus fees. Nothing was repaid. A coverage ratio that doubles because the term was extended is a different thing from one that doubles because earnings grew, and a lender will read it that way too. Our Debt Service Coverage Ratio Calculator covers the measure in more detail.

When Restructuring Is Simply Correct

There is one case where this is not a trade at all but a straightforward fix: when short facilities were used to fund long-lived assets.

Equipment finance over three years on a machine with a twelve year working life is a mismatch. The business pays for the asset three times faster than it earns from it, and the resulting cash strain has nothing to do with whether the business is profitable. Refinancing that balance over a term closer to the asset's life is not deferring a problem, it is correcting a structuring error, and the extra interest is the fair cost of having borrowed correctly in the first place.

The opposite case is the warning sign. Where the freed cash funds ordinary running costs, and particularly where this is the second or third restructure, the constraint is not the lending. Our Minimum Price Calculator and Business Stress Test Calculator address that version of the problem, and no facility restructure will.

Before You Commit

Ask the lender for break costs in writing on any fixed facility being repaid early, since they are not modelled here and can be substantial. Confirm what security is being taken over the consolidated facility, because consolidating several small facilities frequently converts a set of specific charges into one general security agreement plus a personal guarantee. And check whether the new facility can be repaid early without penalty, which is what lets you shorten the term again once the pressure lifts. That last point matters more than it sounds: a ten year facility repaid in six costs far less than the figures on this page, but only if the terms allow it.

Related NZ Business Debt Calculators

• Business Loan Structure Calculator: the same structures compared on new borrowing.
• Debt Consolidation Calculator: consolidation for personal rather than business debt.
• Debt Service Coverage Ratio Calculator: the covenant most lenders test.
• Company Solvency Test Calculator: the directors' test under the Companies Act.
• IRD Instalment Arrangement Calculator: restructuring tax debt specifically.