Refinancing an SBA loan means replacing your current loan with a new one, usually at a lower interest rate or with different terms

The SBA does not refinance loans directly — instead, you work with a bank or lender to take out a new SBA loan that pays off your old one. The most common reason is to lower your monthly payment by getting a better interest rate, extending the loan term, or both. You keep the same business; the loan itself is replaced.

The process is similar to getting your first SBA loan, but faster because your business already has a track record. You will need current financial statements, tax returns, and a reason the refinance makes sense — usually that rates have dropped since you borrowed, or your credit has improved. Some lenders specialize in SBA refinances and move through the paperwork more quickly than others.

Key Takeaways

  • Refinancing replaces your existing SBA loan with a new one from a different lender, not from the SBA itself.
  • The most common reason to refinance is to lower your interest rate or monthly payment when market rates drop or your credit improves.
  • You will need recent business tax returns, personal tax returns, current financial statements, and a business plan or summary showing why refinancing makes sense.
  • The SBA 7(a) program is the most common vehicle for refinancing existing SBA loans, and the process typically takes four to eight weeks.
  • Not all lenders offer SBA refinances, so you may need to contact multiple banks or SBA-preferred lenders to find one willing to take on your loan.

When refinancing makes financial sense

Refinancing costs money upfront — you pay closing costs, appraisal fees, and possibly a small SBA may provide fee — so it only makes sense if you save more than you spend. A rough rule is that you need to stay in the loan long enough for the savings to cover the costs. If you plan to sell the business or pay off the loan within a year or two, refinancing probably costs more than it saves.

The most common scenario is that interest rates have fallen since you took out your original loan. If you borrowed at 8% and rates are now 5%, refinancing could cut your monthly payment significantly. Your credit score may also have improved, which lenders reward with better rates. Some owners refinance to switch from a variable-rate loan to a fixed rate, locking in predictability.

Less common but still valid: you may want to extend the loan term to lower your monthly payment even if rates stay the same, or you may want to borrow additional money at the same time (called a cash-out refinance). The SBA allows this under the 7(a) program, though the extra cash is subject to the same restrictions as the original loan — you cannot use it for personal expenses or to pay off non-business debt.

Documents you will need to gather

Start by collecting the same paperwork you submitted for your original SBA loan. Lenders want to see that your business is still healthy and that refinancing makes sense. Have these ready before you contact a lender:

  • Your last two years of personal tax returns (yours and your spouse's, if you are married and own the business jointly).
  • Your last two years of business tax returns (the full return, not just the summary page).
  • Current business financial statements — a balance sheet and profit-and-loss statement, ideally no more than 90 days old.
  • A list of all business debts, including the original SBA loan, with current balances and monthly payments.
  • A brief explanation of why you are refinancing — for example, "Current rates are lower than our original 8% rate" or "We want to extend the term to improve cash flow."
  • Documentation of the original loan: the promissory note, the loan agreement, and recent statements showing the current balance.

If your business has changed significantly since you took out the original loan — you moved locations, added partners, or took on major new debt — be ready to explain that too. Lenders want to understand the current state of the business, not just the state it was in when you first borrowed.

Which SBA program to use for refinancing

The SBA 7(a) loan program is the standard vehicle for refinancing. It is the same program you likely used for your original loan, and it allows you to refinance existing SBA loans as well as non-SBA loans. The maximum loan amount is $5 million, though most refinances are smaller.

There is also the SBA Express program, which is faster but has a lower cap — usually $350,000 — and may not be available for all refinances. Ask your lender whether Express is an option for your situation.

One important restriction: you cannot use an SBA loan to refinance non-SBA debt if the original lender is still willing to work with you. The SBA calls this the "credit elsewhere" rule. In practice, this means you cannot refinance a conventional bank loan into an SBA loan just to get a better rate — the SBA wants to be a lender of last resort. However, if your original loan was already an SBA loan, this rule does not explore, and you can refinance freely.

How to find a lender

Not every bank offers SBA refinances. Start with your current lender — the bank that holds your original SBA loan — because they already know your business and your payment history. If they are willing to refinance, the process is usually faster.

If your current lender declines or offers a poor rate, contact other banks in your area that advertise SBA lending. You can search the SBA's lender directory on sba.gov, which lists banks and non-bank lenders certified to make SBA loans. Look for lenders marked as "SBA Preferred Lenders" — they have streamlined approval and can close loans faster.

Community development financial institutions (CDFIs) and credit unions sometimes offer SBA refinances as well, often with more flexibility on credit scores or business history. If you have a relationship with a CDFI or credit union, ask whether they refinance SBA loans.

Get quotes from at least two or three lenders before deciding. Interest rates, fees, and terms vary, and a difference of half a percentage point can save you thousands over the life of the loan.

The refinancing timeline and approval process

Once you submit your process, expect the process to take four to eight weeks. The lender will order an appraisal of your business assets (or your real estate, if the loan is secured by property), verify your financial statements, and pull your credit report. The SBA then reviews the process — this is called the "SBA review" — and either approves it or asks for more information.

If everything is in order and your business is still profitable, approval is usually straightforward. The SBA is more likely to approve a refinance of an existing SBA loan than a new loan, because you have already proven you can repay.

Once the SBA approves, the lender orders a title search (if real estate is involved), prepares closing documents, and schedules a closing meeting. At closing, you sign the new promissory note and loan agreement, and the lender wires funds to pay off your old loan. Your new monthly payment begins the following month.

Costs and fees to expect

Refinancing is not free. Typical costs include:

  • SBA may provide fee: Usually 1% to 3% of the loan amount, paid upfront or rolled into the loan balance. This is the fee the SBA charges for guaranteeing the loan.
  • Lender origination fee: Typically 1% to 2% of the loan amount, charged by the bank for processing and underwriting.
  • Appraisal fee: Usually $300 to $1,000, depending on what is being appraised and your location.
  • Title search and insurance: If real estate secures the loan, expect $500 to $2,000.
  • Legal and closing costs: $500 to $1,500, depending on your state and the complexity of the loan.

Ask the lender for a Loan Estimate form, which breaks down all costs upfront. Compare the total cost across lenders — a lower interest rate does not always mean a lower total cost if fees are higher.

Frequently Asked Questions

Can I refinance an SBA loan if my business is struggling?

It depends on how much you are struggling. If you are current on payments and your business is still profitable, most lenders will refinance. If you are behind on payments or your business is losing money, refinancing becomes much harder. Some lenders specialize in distressed businesses, but rates will be higher. Talk to your current lender first — they may be willing to work with you if you have a plan to improve.

What if I want to refinance but my current lender says no?

You can take your loan to another lender. The original lender does not have to approve the refinance; they just have to release the lien once the new lender pays them off. Contact other SBA-certified lenders in your area and ask if they will refinance your existing loan. Preferred Lenders tend to move faster on these requests.

How much can I borrow if I refinance?

You can borrow up to $5 million under the SBA 7(a) program. Most refinances are for the amount needed to pay off the old loan, but you can borrow more if you need cash for the business. The extra amount is subject to the same restrictions as the original loan — it must be used for business purposes, not personal expenses or to pay off personal debt.

Will refinancing hurt my credit score?

Refinancing will cause a small, temporary dip in your credit score because the lender pulls a hard credit inquiry and opens a new account. The dip is usually 5 to 10 points and recovers within a few months. The long-term benefit — lower monthly payments and better cash flow — typically outweighs the short-term impact.

Can I refinance if I have not owned the business for very long?

Most lenders want to see at least two years of business tax returns, which means you need to have owned the business for at least two years. If you are newer than that, refinancing will be difficult. Some lenders make exceptions if your business is very profitable or if you have strong personal credit, but expect to pay a higher rate or face a decline.