The main benefit of refinancing an SBA loan is that it can provide a borrower with more favorable loan terms. This could include a lower interest rate, a longer repayment term, or a lower monthly payment. Additionally, refinancing can provide access to additional funds, which can be used for business expansion or other investments. According to the SBA, refinancing is only allowed in certain circumstances, such as when a borrower applies for a non-SBA loan and the lender tells them that they cannot get approved for financing without an SBA guarantee, or when a borrower requests a loan modification but the lender cannot modify the terms because the loan has already been sold on the secondary market. 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.

In addition, refinancing can be used to generate down payment funds for an SBA loan. This could include refinancing a mortgage, car, or boat if the conditions are right.

In order to refinance debt with an SBA loan, you’ll need to meet certain eligibility requirements. Generally, here are the eligibility requirements for refinancing with an SBA 7(a):

• Credit score of at least 690
• No bankruptcies in the past three years
• A minimum down payment of 10%
• For franchisees, a paid franchise fee prior to loan fund release
• A clean criminal history, or the ability to explain any misdemeanors on your record
• No current federal debt

In addition, the business that will benefit from the refinanced debt will generally need to be:

• A for-profit entity
• A small business by definition
• Based in the United States
• A business with invested equity
• A business that has exhausted all other financing options

These requirements ensure that the loan is eligible for SBA backing. If the loan is ineligible, you’ll need to seek other forms of small business financing to restructure your debt.

The Small Business Administration (SBA) offers two types of loan refinancing: the SBA 7(a) and the 504 loan. The SBA 7(a) loan typically caps at $5 million, while the 504 loan can go as high as $20 million. 7(a) financing is generally much faster to get, but interest rates are far more competitive with the 504 vehicle — at the cost of additional bureaucracy and a slower timeline. Both types of loans are generally full recourse, and all borrowers' businesses must meet the SBA's type and size requirements to qualify.

Compare current rates for SBA loans in the table below:

Refinancing an SBA loan can be a great way to get better terms and lower interest rates, but there are some risks associated with it. The most significant risk is that the SBA may not approve the refinance, which could leave the borrower in a worse financial position than before. Additionally, the borrower may have to pay additional fees and closing costs associated with the refinance, which could add to the overall cost of the loan. Finally, the borrower may have to provide additional documentation to the SBA in order to be approved for the refinance, which could be time-consuming and costly.

The length of time required for an SBA loan to be refinanced can vary drastically, but averages between 60 and 90 days. With that being said, it may take up to six months in some situations. There is no hard and fast rule here, and each situation will be unique. Factors that go into determining the length of time to loan approval include:

• Your ability to gather all required information
• Your ability to satisfy all lender requirements for information and proof of income
• SBA approval (up to 7 days)
• Due diligence (2 to 3 weeks)
• Closing (up to 14 days)

In addition, for a borrower to be eligible for any kind of SBA refinancing, they must be in good standing and must have been current on all loan payments for the previous 36 months.

For more information, please visit www.sba7a.loans/sba-7a-loans-small-business-blog/refinancing-an-sba-loan and sba504.loans/sba-504-blog/sba-504-approval-time.