Refinancing debt with an SBA loan is a smart move for many business owners. Doing this can increase cash flow and swap poor loan terms for favorable ones. Not all debt is eligible, and a business must meet specific requirements to secure refinancing through the SBA.
At Business Funding Group (BFG), we have decades of experience helping business owners secure SBA loans and refinancing. We can determine your eligibility during a complimentary, 10–to 15-minute, no-obligation phone call. Contact us today to discuss your SBA loan refinance options.
SBA Loan Refinancing Must Be Beneficial to the Borrower
The main goal of debt refinancing is to put the borrower in a better financial position than before the new loan, and a calculation can determine this. SBA loan refinancing must reduce the borrower’s monthly installment payments by at least 10%.
For example, if a business owner currently pays $10,000 per month on an existing loan, the new SBA loan must lower that amount to $9,000 or less per month to qualify. This is to ensure business owners receive actual benefits from refinancing rather than simply moving debt from one place to another.
What Debt Is Eligible for SBA Refinancing?
SBA loans provide a flexible path to refinance many types of business debt, helping you lower payments, reduce interest rates, or consolidate multiple loans. The following debts are commonly eligible for SBA refinancing under the 7(a) program:
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Balloon or demand notes: Loans with lump-sum or callable payments can be refinanced to create more manageable, predictable installments
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Business credit card debt: SBA refinancing can consolidate outstanding business credit card balances, as long as the charges were used for legitimate business purposes
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Revolving lines of credit: Unrenewed or high-interest lines of credit can be replaced with a structured SBA loan, improving cash flow and simplifying payments
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Other eligible business loans: Short-term loans, equipment loans, or loans with unfavorable terms may qualify, provided they support legitimate business operations
Refinancing with an SBA loan can also help you extend terms, reduce monthly payments, or free up working capital for business growth—all while staying compliant with SBA rules.
What Debt Is NOT Eligible for SBA Refinancing?
Certain types of debt are ineligible for SBA refinancing. Examples of ineligible debt include:
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Personal (non-business) debt: SBA loans cannot be used to refinance personal expenses, such as credit cards, home mortgages, or car loans
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Delinquent or defaulted debt: Loans that are past due or in default generally cannot be refinanced. Borrowers must typically be current on all payments
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Debt that could cause SBA losses: Loans where refinancing would shift a potential loss from the lender to the SBA are not allowed
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Debt tied to ineligible or speculative business activities: Loans originally used for speculative investments, pyramid schemes, or otherwise ineligible business activities cannot be refinanced with SBA funding
Refinancing an existing SBA loan with another SBA loan is not necessarily prohibited, but it certainly is not the norm.
Collateral and Lender Positioning (UCC Requirements)
When refinancing a loan, the new SBA lender must take the same Uniform Commercial Code (UCC) lien position as the original lender. This means that if the original loan was secured with specific business assets, the lender must secure the new loan with those same assets.
This requirement ensures that the loan maintains the same security interest in the business’s assets as the original loan. Before refinancing, lenders will conduct a UCC lien search to verify existing claims on assets and ensure proper collateral placement.
Contact BFG for SBA Loan Refinancing
Refinancing business debt can help your business in many ways. SBA loan refinancing can lower monthly payments, secure better loan terms, and offer more financial stability. To take advantage of this option, the debt you want to refinance must be current (and must have been so for the last 12 months or the life of the loan—whichever is less).
It is important to understand that SBA eligibility rules are strict and ensure the debt qualifies for refinancing with a clear financial benefit. If you’re a business owner considering SBA loan refinancing, it’s helpful to work with experienced professionals when navigating these requirements.
At BFG, we can help you assess your current debt schedule, determine your eligibility for refinancing, and assist with the refinancing process. Contact us today to learn more about your SBA loan refinance options.
(917) 593-5013