If you borrowed from a private credit fund in 2023 at SOFR + 625, you are paying close to 10% all-in today. A bank would lend to you at SOFR + 300 – all-in cost under 7%. Debt refinancing for SaaS companies could help reduce your annual interest burden significantly. On a $30 million facility, that is nearly $1 million per year in interest expense that could be redeployed toward growth. With corporate debt refinancing, SaaS companies can achieve substantial savings and optimize their capital structure.
The math has changed. The question is whether management teams will act on it, especially when considering corporate debt refinancing as a strategic option.
The Quick Take
What is happening:
- 2022-2023 debt pricing: SOFR + 600 to 750 basis points was typical for middle-market software deals
- 2026 bank pricing for quality credits: SOFR + 275 to 325 basis points is now achievable
- Private credit spreads have compressed to SOFR + 450 to 475 basis points (Morgan Stanley projects private credit first-lien yields will trough at 8.0% to 8.5% this year)
- Spread compression has accelerated as both banks and private credit lenders compete for limited deal flow
Why it matters to you:
- Your debt may be mispriced relative to current market conditions and your company’s improved performance
- Refinancing is not disloyalty – your current lender expects you to optimize your capital structure
- The window is open now – market conditions favor borrowers, but cycles turn
- Deal execution in 45 to 60 days is achievable on platforms like CAPX
What Changed Since 2022-2023
The 2022 and 2023 vintages of private credit debt came during a period of peak uncertainty. Interest rates were rising aggressively, and lenders priced in risk accordingly. Borrowers accepted terms that reflected market conditions at the time.
Three years later, the landscape looks materially different. In many cases, now is the optimal time for SaaS companies to consider debt refinancing.
Bank competition has intensified. Regional and super-regional banks are actively pursuing software credits they previously avoided. The recurring revenue model that made some of these lenders cautious in 2022 is now better understood, with established underwriting frameworks and track records.
The December 2025 rescission of the Interagency Leveraged Lending Guidance by the OCC and FDIC has further changed the dynamic. The guidance, which dated back to 2013, was deemed overly restrictive and had pushed significant market share to nonbank lenders. With these constraints removed, banks can now pursue leveraged lending opportunities they could not have considered just a few years ago.
Private credit has record dry powder. With over $400 billion waiting to be deployed, direct lenders are competing on spread rather than walking away from quality deals. SOFR + 450 to 475 basis points is now common for borrowers that can demonstrate strong fundamentals. The market is characterized by too much capital chasing too few deals.
Credit quality has proven out. Companies that weathered 2022 and 2023 with stable or improving metrics have earned the right to better terms. Lenders reward demonstrated resilience.
What Makes a Strong Refinancing Candidate
Not every software company will qualify for materially better terms. Lenders are looking for specific indicators:
Net revenue retention solidly above 100%. This signals product stickiness and expanding revenue, reducing perceived credit risk.
Gross margin above 70%. Software economics matter. Higher margins mean more cushion for debt service.
Churn below 10% annually. Predictability in the revenue base is the foundation of any software credit.
Clean growth trajectory. Companies do not need to be hyper-growth, but they need to demonstrate that the business is not contracting.
Management credibility. Lenders want to see a team that understands their numbers and can articulate the business clearly.
The Refinancing Math
Consider a straightforward example.
A software company has a $30 million term loan originated in 2023 at SOFR + 625 basis points. With SOFR at approximately 3.74% in early 2026, the all-in cost is approximately 9.99%.
That same company, with three years of solid performance, could today secure bank debt at SOFR + 300 basis points. New all-in cost: approximately 6.74%.
Annual savings: $975,000.
Over a five-year term, that is $4.88 million in interest expense that could fund product development, sales capacity, or simply improve cash flow.
For companies that locked in even higher spreads in 2022 or early 2023, the savings can be substantially larger.
Addressing the Common Hesitation
Many CFOs hesitate to explore refinancing because they do not want to disrupt their lender relationship. This concern, while understandable, is misplaced.
Professional lenders expect borrowers to manage their capital structure actively. Exploring alternatives is standard practice, not betrayal. In many cases, your existing lender will match or improve terms when faced with competitive pressure, particularly during a period when corporate debt refinancing is possible for many borrowers.
Running a broad process creates leverage. You cannot know whether your current pricing is market-appropriate without testing it. Platforms like CAPX allow companies to access multiple lenders simultaneously, creating the competitive dynamic that drives better outcomes.
Executing the Process
A well-prepared refinancing on CAPX follows a compressed timeline:
Day 1 to 2: Build your credit story on the platform and launch. CAPX structures your information to present to lenders in a standardized format that accelerates review.
Week 1: Term sheets arrive. Multiple lenders review simultaneously, creating competitive tension and clarity on market pricing.
Weeks 2 to 7: Lender due diligence, documentation and closing. Standard timeline of 30 to 45 days once a term sheet is selected.
Total deal execution: 45 to 60 days from launch to close.
The Bottom Line
If your company raised debt in 2022 or 2023 at SOFR + 550 or higher, and you have performed well since then, you are likely leaving significant money on the table. Quality software credits can now access bank debt at SOFR + 275 to 325 basis points – translating to all-in rates around 6.5% to 7.0%. The spread compression in middle-market lending is real, regulatory constraints on bank lending have eased, and the competitive dynamics favor borrowers who run a disciplined process. In summary, corporate debt refinancing presents a timely opportunity for many businesses to lower costs and improve financial health.
The refinancing window is open. The question is not whether to look – it is whether you can afford not to.
