Refinancing Short Term Bridge Loans as SBA 7a

SBA came out with a policy notice last year on September 8, 2021 that made revisions to the existing policy regarding refinancing short-term loans. Many small business owners are unaware of this but the revisions make it difficult to be done but possible. Here are some key points;

- Must demonstrate the necessity for the interim loan (bridge loan).

- The interest rate on the interim loan may not exceed the maximum rate SBA allows.

- Term of the interim loan must be 12 months or less.

- The interim lender must charge the borrower only fees and be reimbursed for allowable expenses that comply with the SBA requirements for fees and expenses.

- The interim loan must be current.

Two conditions come into play that make this difficult is that interim lenders tend to have rates that are above SBA’s maximum allowable rate. The second are the fees that interim lenders charge which more than the allowable amount allowed. However, there are interim lenders that specialize in these types of projects and are able to follow SBA’s guidelines to make the refinance happen.

This information is available to the public and can be downloaded from SBA.gov. To download the Policy Notice, the control no. is 5000-814473.

Team members at Blue Water Capital Advisors have significant knowledge of SBA’s policies and are always up-to-date with any changes. We do have interim lenders that are able to assist with this. Reach out to us if you have a project that falls in this category or if you have questions related to SBA financing. Don’t forget to subscribe to our newsletter!