Refinancing an existing SBA loan or debt on reasonable term with a new SBA loan

People may say that you cannot refinance a SBA loan with a new SBA loan. They are correct if you are following the requirements per the SBA SOP, however, it is possible as long as the purpose makes sense.

The SOP lays out numerous conditions that must be met but, in these cases, they will not satisfy all requirements. This also is the case when a non-SBA loan is on reasonable terms. The definition for this is if the non-SBA loan has terms and conditions that fall within the categories allowed by SBA, it would be deemed ineligible for SBA refinance. For example, if you had a $1 million loan with a rate of 5% with a 25-year term (fully amortized), this would be ineligible to refinance as a SBA 7a. Reason is that the interest rate is within the rate range SBA allows and the term is 25 years which is a term SBA allows for real estate secured loans.

For any loan that falls under this case, the lender cannot approve the loan under delegated authority but sent it directly to SBA through General Processing for approval. If the case is strong, then SBA will usually approve the request. It is not 100% guaranteed but very likely they will approve.

All this information can be found in the SBA SOP 50 10 6 which came out on October 1, 2020.

Our team has done many of these as prior bankers and received approval on the refinances. With their knowledge, they can help structure the deal to make the case strong enough for SBA to give their approval and know what additional documents are needed as well.

Team members at Blue Water Capital Advisors have significant knowledge of SBA’s policies and are always up-to-date with any changes. If you have questions regarding any SBA eligibility topics, feel free to reach out to us. Don’t forget to subscribe to our newsletter!