If your business is carrying expensive or short-term debt, refinancing into an SBA loan can lower the monthly payment and free up cash flow. Both main programs allow some refinancing, with rules.
Refinancing with a 7(a) loan
The 7(a) program can refinance qualifying business debt, such as high-rate or short-term loans, into a single SBA loan with a longer term. To qualify, the debt generally has to be on terms the SBA considers eligible, and the refinance has to benefit the business (for example, a meaningfully lower payment). Some existing SBA and federal debt is restricted.
Refinancing with a 504 loan
The 504 program has a refinancing option focused on eligible commercial real estate and fixed-asset debt. It can be a strong tool for owners who bought property on a short-term or balloon loan and want to lock in a long, fixed rate.
Why owners do it
- Lower monthly payment by extending the term.
- A fixed, predictable rate, especially with 504.
- Consolidating several debts into one payment.
The trade-off is that a longer term can mean more total interest, and SBA refinancing has fees and eligibility rules. Run the numbers with the loan calculator, check which program fits using the eligibility checker, and confirm what qualifies with a participating lender, since the rules follow the current SBA SOP.