Can You Refinance an SBA Loan?

In most cases, the SBA will not permit a borrower to refinance an SBA-guaranteed loan such as the SBA 7(a) or SBA 504 loan. However, this doesn’t mean that borrowers who have trouble paying back their loans or want to achieve better loan terms don’t have any options.

The SBA Will Refinance Loans Under Certain Circumstances

While SBA loan refinances are rare, they are permitted in some situations. For example, if a borrower applies for a non-SBA loan, and the lender tells them that they cannot get approved for financing without an SBA guarantee, the SBA might decide to permit a refinance of the current loan in order to guarantee the borrower’s new source of financing. However, for this to occur, the borrower and both lenders will need to bring significant documentation to the SBA for approval.

In addition, if a borrower requests a loan modification, but the lender cannot modify the terms because the loan has already been sold on the secondary market, or ‘securitized,’ the SBA may also permit a refinance. In order to get refinancing in this situation, a borrower would need to contact the SBA directly with documentation from their lender, and would then have to apply for a completely new loan. In order to be eligible for any kind of SBA refinancing, a borrower must be in good standing and must have been current on all loan payments for the previous 36 months.


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