- SBA refinancing can replace high-interest debt with lower rates (capped at Prime + 3% for loans over $350K) and longer terms (up to 25 years).
- Most business debt qualifies: conventional loans, commercial mortgages, equipment loans, MCAs, business credit cards, and alternative lender debt.
- Refinancing must provide “tangible benefit” to the business—lower rate, longer term, lower payment, or eliminated balloon.
- Cash-out refinancing is allowed when the primary purpose is debt payoff and proceeds are used for eligible business purposes.
Carrying high-interest business debt? SBA loan refinancing can help you consolidate existing debt, lower your monthly payments, and free up cash flow for growth. With interest rates capped by the SBA and terms up to 25 years, refinancing into an SBA loan is one of the most effective ways to restructure business debt.
SBA Refinancing Overview
What Is SBA Refinancing?
SBA refinancing uses an SBA loan to pay off existing business debt—replacing one or more loans with a new SBA-backed loan that typically has better terms: lower interest rates, longer repayment periods, and lower monthly payments.
Why Refinance with an SBA Loan?
- Lower interest rates: SBA rates are capped, often lower than conventional or alternative lenders
- Longer terms: Up to 25 years for real estate, 10 years for other debt
- Lower payments: Extended terms mean lower monthly obligations
- Consolidation: Combine multiple debts into one payment
- Eliminate balloons: Replace balloon loans with fully amortizing SBA loans
- Improve cash flow: Lower debt service frees up operating capital
What Debt Can Be Refinanced with SBA?
Eligible for Refinancing
- Conventional business loans: Bank loans, credit lines
- Commercial mortgages: Real estate loans (refinance into 25-year SBA)
- Equipment loans: Equipment financing and leases
- Merchant cash advances: MCAs and daily debit arrangements
- Business credit cards: Outstanding business credit card debt
- Alternative lender debt: Online lender and fintech loans
- Seller notes: Existing seller financing (in some cases)
- Previous SBA loans: Under certain conditions
Federal debt (cannot refinance federal government loans except prior SBA loans under specific rules), taxes owed (cannot pay off delinquent taxes), personal debt (only business debt qualifies), and recently incurred debt (some limitations apply).
SBA Refinancing Requirements
General Requirements
Per SBA SOP 50 10 8, debt refinancing with SBA loans must meet specific criteria:
- Business benefit: Refinancing must provide a tangible benefit to the business
- Reasonable terms: The original debt must have been reasonable when incurred
- Business purpose: Original debt must have been used for business purposes
- Documentation: Lender must document the debt being refinanced
Required Documentation
For 7(a) Small Loans (under $350,000), lenders must include a written analysis addressing:
- The reason the debt was originally incurred
- Why the lender believes the existing debt no longer meets the borrower’s needs
- Supporting documentation for each debt to be refinanced
The SBA considers refinancing beneficial when it: reduces interest rate, extends repayment term, lowers monthly payment, eliminates balloon payment, improves debt service coverage ratio (DSCR), or consolidates multiple debts into a manageable single payment.
Benefits of SBA Refinancing
Lower Interest Rates
SBA rates are capped by regulation. For loans over $350,000, the maximum is Prime + 3% (approximately 10.5% as of February 2026). Compare this to:
- Online lenders: 15-35%
- Merchant cash advances: 30-60%+ effective APR
- Business credit cards: 18-28%
Longer Repayment Terms
| Debt Type | Typical Term | SBA Term |
|---|---|---|
| Working capital | 1-3 years | Up to 10 years |
| Equipment | 3-5 years | Up to 10 years |
| Commercial real estate | 5-10 years (balloon) | Up to 25 years |
Example: Monthly Payment Reduction
Refinancing $500,000 in debt:
| Scenario | Rate | Term | Monthly Payment |
|---|---|---|---|
| Current debt | 15% | 5 years | $11,895 |
| SBA refinance | 10.5% | 10 years | $6,748 |
| Savings | $5,147/month |
SBA 7(a) vs. 504 for Refinancing
SBA 7(a) Refinancing
Best for refinancing:
- Working capital debt
- Equipment loans
- Multiple debt types in one loan
- Real estate loans (when combined with other purposes)
Maximum: $5 million
SBA 504 Refinancing
Best for refinancing:
- Commercial real estate loans
- Major equipment loans
- When lowest fixed rate is priority
Maximum: $5.5 million (CDC portion)
504 refinancing has more restrictions—it’s primarily for fixed assets (real estate and major equipment). 7(a) offers more flexibility for mixed-purpose refinancing.
Cash-Out Refinancing Rules
What Is Cash-Out Refinancing?
Cash-out refinancing means borrowing more than the payoff amount of existing debt—receiving the difference as cash for working capital or other business purposes.
SBA Rules for Cash-Out
The SBA allows cash-out refinancing when:
- The primary purpose is debt refinancing (not just accessing equity)
- Cash-out amount is reasonable relative to the project
- Use of cash-out proceeds is for eligible business purposes
- Loan meets all other SBA requirements
Real Estate Cash-Out
For real estate refinancing, you may be able to access equity built in the property, subject to loan-to-value limits (typically 80-90% LTV).
The SBA Refinancing Process
Step 1: Assess Your Current Debt
List all business debts including:
- Outstanding balance
- Current interest rate
- Monthly payment
- Remaining term
- Any prepayment penalties
Step 2: Gather Documentation
- Loan statements for all debt to be refinanced
- Original loan documents
- 3 years business tax returns
- 3 years personal tax returns
- Current financial statements
- SBA Form 1919
- Personal Financial Statement
Step 3: Submit to SBA Lenders
Work with an SBA loan broker to submit your application to multiple lenders. Lender appetite for refinancing varies—some specialize in it, others are less interested.
Step 4: Underwriting
Lender verifies existing debt, analyzes benefit to borrower, and underwrites the new loan.
Step 5: Closing and Payoff
At closing, funds pay off existing debt directly. You receive one new loan with better terms.
Timeline
- Refinance only: 4-6 weeks
- Refinance + real estate: 6-10 weeks
- Refinance + acquisition: Follows acquisition timeline
When SBA Refinancing Doesn’t Make Sense
High Prepayment Penalties
If existing debt has significant prepayment penalties, calculate whether the savings from refinancing outweigh the penalty cost.
Recent Debt
The SBA may question refinancing debt that was just incurred. There should be a legitimate reason the debt no longer meets your needs.
Short-Term Bridge Needs
If you need very short-term financing (under 1 year), the SBA process may be too slow. SBA loans are better for longer-term restructuring.
Weak Financials
If your business doesn’t meet SBA requirements (credit, cash flow, DSCR), you may not qualify. Consider improving financials before applying.
SBA refinancing is one of the most powerful tools for restructuring business debt. By consolidating high-interest loans into a single SBA loan with capped rates and extended terms, you can dramatically reduce monthly payments and free up cash flow. In the example above, refinancing $500K in debt saves over $5,000 per month—that’s $60,000+ per year back into your business. If you’re carrying expensive debt, SBA refinancing should be on your radar.
Frequently Asked Questions
Yes, under certain conditions. You cannot refinance an SBA loan with another SBA loan solely to get better terms if the existing loan is performing. However, you can refinance if you’re adding new money or if there are other qualifying circumstances.
Up to $5 million with SBA 7(a), or up to $5.5 million (CDC portion) with SBA 504. For larger amounts, pari passu structures can help.
Yes, MCAs can be refinanced with SBA loans. This is often highly beneficial given the extremely high effective rates of most MCAs.
Most lenders prefer 680+ for refinancing. Strong cash flow and collateral can sometimes offset lower credit scores.
There’s no SBA minimum, but most lenders prefer refinancing loans of $100,000 or more. Smaller amounts may be better suited for 7(a) Small Loans.
Yes, subject to SBA rules. The primary purpose must be refinancing, but you can often include additional working capital in the loan.
