Refinancing business debt with an SBA loan

Can you refinance business debt with an SBA loan?

Yes. Refinancing is an eligible use of an SBA 7(a) loan, and an SBA 504 loan can refinance debt on owner-occupied real estate and long-lived equipment. Owners refinance to:

• Lower monthly payments by spreading short-term debt over a longer term
• Replace high-cost debt, such as merchant cash advances or business credit cards
• Consolidate several debts into one payment
• Replace a loan with a balloon payment that is coming due

The debt must have been used for the business, for purposes an SBA loan could finance. Personal debts that didn’t fund the business, and loans for passive real estate investment, can’t be refinanced.

The new loan’s term follows what the original debt paid for: up to 25 years for real estate, and generally 10 years for other debt. That longer term is where much of the payment relief comes from.

What debt can an SBA 7(a) loan refinance?

A 7(a) loan can refinance most kinds of business debt, including term loans, equipment loans, commercial mortgages, seller notes, business credit cards and lines of credit. To qualify, a debt generally has to pass two tests: it must be seasoned, and refinancing it must lower your payment.

Definition

Seasoning:

How long a debt has been paid as agreed. For a 7(a) refinance, the debt must have been paid on time for the last 12 months.

A debt that is behind, or that has recently been late, usually can’t be refinanced until it has a clean payment record again.

What is the SBA payment benefit test?

The new payment on the refinanced debt must be at least 10% lower than the payment you make today. Some debts are exempt from this test:

• Balloon notes and demand notes
• Business credit cards
• Home equity lines of credit (HELOCs) used for the business
• Lines of credit

Can you refinance a merchant cash advance with an SBA loan?

Only after a conversion step. A merchant cash advance (MCA) must be converted into a term loan amortized over 24 months before an SBA loan can refinance it.

If you have one or more advances, raise them with lenders at the start. They’ll look closely at how much of your daily or weekly sales the advances take, and the conversion has to be worked out with the funder before the refinance can close.

Can a lender refinance its own loan with an SBA loan?

Yes. Under SOP 50 10 8.1, which took effect October 1, 2026, a lender with delegated SBA authority (a Preferred Lender) can refinance its own non-SBA loan to your business without sending the request to the SBA for review. Before, these same-institution refinances needed SBA review, which added time.

That change can make your current bank a faster option if it’s a Preferred Lender. The debt still has to meet the usual refinancing tests.

Can you refinance commercial real estate with a 504 loan?

Yes, if your business occupies the property. The 504 program offers two kinds of refinancing:

1. Refinancing with an expansion. If you’re also buying, building or improving fixed assets, the 504 project can include existing debt. The debt you refinance can be as large as the expansion’s cost, but no larger.
2. Refinancing without an expansion. You can refinance qualified debt on its own, up to 90% of the property’s value. At least 75% of the original loan proceeds must have paid for eligible fixed assets such as real estate or equipment, and the debt must have been in place for a minimum period, so very recent loans don’t qualify.

Both options give you a fixed rate on the CDC portion. The annual fee on a refinance without an expansion is slightly higher than the standard 504 annual fee of 0.203%. For more on the program, see SBA 504 loans and SBA commercial real estate loans.

What does it cost to refinance with an SBA loan?

Before you refinance, compare the full cost of the new loan with what you pay now. With a variable-rate 7(a) loan, interest is set by the lender but can’t exceed Prime + 3% to 6.5%, depending on loan size. The main fee is the SBA’s upfront guaranty fee, charged on the guaranteed portion and usually financed into the loan:

Also budget for:

• Closing costs, such as appraisals, title work and lender packaging fees
• Prepayment penalties on the debt you’re paying off, if your current lenders charge them

A lower payment from a longer term can still cost more in total interest over the life of the loan. Run the numbers with the SBA loan calculator before you decide.

What do you need to apply for an SBA refinance?

Lenders will usually ask for:

• A debt schedule listing every debt, with its lender, balance, rate, payment, maturity and collateral
• Statements or a payment history for each debt covering the last 12 months
• Copies of the notes and loan agreements being refinanced
• Business tax returns and financial statements, plus year-to-date figures
• Personal tax returns, a personal financial statement (SBA Form 413) and SBA Form 1919
• For credit cards, records showing the charges were business expenses

How do you find the right lender for refinancing business debt?

Lenders differ in how often they refinance debt, and in the industries, loan sizes and states they fund. A lender that regularly works with businesses like yours knows what documentation to ask for, which usually means fewer surprises in underwriting.

SBA Loan Connect ranks lenders using the SBA’s public loan records, so you can see which lenders actually fund businesses like yours before you apply. Partner lenders are labeled. See how we rank lenders.