1. Continuing business.
Replacement financing for a continuing business operation, when the current financing reaches the end of its term.
Refinancing and event-driven loan volumes
- "Looking more closely at the decline in European loan volumes in 2016, the most significant fall was in refinancing activity, as opposed to event-driven financing."
- The Treasurer magazine, March 2017 p36 - Ian Baggott, head of loan markets, Lloyds Bank.
2. Insolvent business.
Replacement financing for an insolvent - or potentially insolvent - continuing business operation, when the current financing is in default, or potentially in default.
The borrower's negotiating position may be extremely weak in these circumstances.
It is clearly preferable to arrange refinancing well in advance of any pressing need for it, when the borrower's negotiating position will typically be much stronger.
Replacement financing for a mortgage borrower, especially a residential mortgage, for continuing ownership of the same residence or other asset.
Sometimes known as 'refi'.