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How to Refinance an SBA Loan Successfully

If your SBA loan is now making it hard to operate your business, you may want to consider refinancing. Learn more about how to refinance an SBA loan.

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How to Refinance an SBA Loan Successfully

If your SBA loan is now making it hard to operate your business, you may want to consider refinancing. Click here learn how to refinance an SBA loan.

Each year, more than 627,000 new small businesses open their doors. Many of these businesses rely on loans from the Small Business Association (SBA) to fund startup costs and bring their vision to life.

These loans are a wonderful way to fund new projects, but as your business changes, the original loan terms may put strain on your operating budget.

It is possible to refinance an SBA loan, but the process is more complicated than you might think.

Wondering what you can do? In this guide, we'll cover the steps you'll need to take to refinance a business loan and take back control of your budget.

Understand What Refinancing Does

Refinancing business loans is not a way to get rid of your debt. It's a way to reduce the debt burden and improve your interest rate.

You do this by taking out a new loan with a lower interest rate than the original loan.

When you refinance an SBA loan, your goal is to lower your monthly costs and your total amount owed. By lowering your interest rate, you do both.

Closeup on notebook over wood table background, focus on wooden blocks with letters making Refinance text. Concept image. Laptop, glasses, pen and mobile phone in defocused background

Before you can decide if it's the right option for your business, you need to consider if refinancing is the best option in the first place.

Look at the current interest rates on refinancing loans. If they're lower than your current loan, refinancing is a good option.

Remember, the goal is to find a better loan, not to roll the balance over into a loan that offers the same or similar terms as the original.

Why Would You Refinance?

When first starting out, many small businesses take high-interest rate short-term loans to get immediate funding.

While this helps you open the doors in the first place, it can quickly become more of a burden as your company grows.

High-interest loans with short repayment terms require higher payments each month. That takes a good chunk of money away from your operating budget.

Worse, they also increase the amount you owe on the entire loan.

If you're trying to grow your business, you need to have money to invest in growth. Refinancing your SBA loan will free up money each month, giving you more cash to invest in your company.

Refinancing Can Also Help You Consolidate Debt

Over the first few years of your business, it's likely that you've taken out a couple loans to cover expansion and additional startup costs.

Multiple loans often mean multiple interest rates, payments, and complicated repayment schedules.

By refinancing all of your SBA loans, you'll be able to streamline your monthly payments.

Instead of juggling multiple accounts, you'll have one payment to make each month. You'll still have the same amount of debt in total, but everything will be managed by one lender.

For bookkeeping purposes alone, this is enough for many small businesses to want to refinance debt.

Look at Your Existing Loan Information

Before you can refinance, you'll need to look at your current loan information. Make a note of the following information:

  • Current outstanding balance
  • Your monthly principal and interest payments
  • The current interest rate
  • Early repayment terms of the loan
  • How long you have left on the loan itself

Once you have a clear understanding of the loan, look at your business's current performance.

Do you have enough income to justify the refinancing process? Can you afford the early repayment fees and loan origination fees on the new loan?

Yes? Then start looking into your available refinancing options!

Consider Your Refinancing Options

When it comes to refinancing a loan, there are several methods to choose from.

You can use your bank's small business division, take out a refinancing loan from the SBA program, find a dedicated SBA loan modification professional to work with or simply check out this resource from FitSmallBusiness.com by clicking here:  SBA Loans: Types, Rates & Requirements.

The right option for your business will depend on the original loan terms and your budget.

Regardless of the avenue you choose, you should be able to find a new loan with a lower interest rate that will save you money in the long run. Just make sure to compare loan options from different lenders.

The last thing any small business wants to do with debt refinancing is to end up in a loan that costs them more.

Refinance What You Need

When considering your options, make sure you only borrow what you need. Borrowing more than you need increases your overall debt and could put strain on your business in the future.

Remember, the purpose of refinancing is to lower your payments, not increase your debt!

The Benefits of Refinancing an SBA Loan

In addition to lower interest rates and lower total loan expenses, refinancing debt has several other benefits.

Improved Business Credit Score

Businesses have credit scores, much like you do. The more loans you have, the higher your credit utilization (the amount of your available credit you use each month) will be.

When your credit utilization is high enough, it can cause your business credit score to go down.

By consolidating your SBA loans, you'll be able to reduce your total credit utilization. Over time, this will help your business credit score go back up to a healthy level.

Access to More Money

Since loan refinancing frees up more money each month, you'll have immediate access to more capital. This allows you to build your business with the profits you make rather than forcing you to take out another short-term high-rate loan.

If You Are In Default On Your SBA Loan, You Will Need An Alternative To Refinancing

If, however, you are in default on your SBA loan, finding another bank to refinance your loan will be difficult since most traditional lenders are not going to risk a new loan on a borrower that is in default.  You may need to consider other options.

If you owe more than $30,000 on an SBA loan, Protect Law Group can help.  Contact us today and let our experienced team help you with your SBA loan default.

Why Hire Us to Help You with Your Treasury or SBA Debt Problems?

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Millions of Dollars in SBA Debts Resolved via Offer in Compromise and Negotiated Repayment Agreements without our Clients filing for Bankruptcy or Facing Home Foreclosure

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Millions of Dollars in Treasury Debts Defended Against via AWG Hearings, Treasury Offset Program Resolution, Cross-servicing Disputes, Private Collection Agency Representation, Compromise Offers and Negotiated Repayment Agreements

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Our Attorneys are Authorized by the Agency Practice Act to Represent Federal Debtors Nationwide before the SBA, The SBA Office of Hearings and Appeals, the Treasury Department, and the Bureau of Fiscal Service.



Clients personally guaranteed an SBA 7(a) loan.  The SBA referred the debt to the Department of Treasury, which was seeking payment of $487,981 from our clients.  We initially filed a Cross-Servicing Dispute, which was denied.  As a result, we filed an Appeals Petition with the SBA Office of Hearings and Appeals asserting legal defenses and supporting evidence uncovered during the discovery and investigation phase of our services.  Ultimately, the SBA settled the debt for $25,000 - saving our clients approximately $462,981.



Client personally guaranteed SBA 7(a) loan balance of $58,000.  Client received Notice of Intent to initiate Administrative Wage Garnishment (AWG) Proceedings.  We represented client at the Hearing and successfully defeated the AWG Order based on several legal and equitable grounds.



Client personally guaranteed SBA 7(a) loan for $350,000. The small business failed but because of the personal guarantee liability, the client continued to pay the monthly principal & interest out-of-pocket draining his savings. Client hired a local attorney but quickly realized that he was not familiar with SBA-backed loans or their standard operating procedures. Our firm was subsequently hired after the client received the SBA's official 60-day notice. After back-and-forth negotiations, we were able to convince the SBA to reinstate the loan, retract the acceleration of the outstanding balance, modify the original terms, and approve a structured workout reducing the interest rate from 7.75% to 0% and extending the maturity date for a longer period to make the monthly payments affordable. In conclusion, not only we were able to help the client avoid litigation and bankruptcy, but we also save him approximately $227,945 over the term of the workout.

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