Refinancing SBA 7a

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September 01, 2025

by a searcher from University of Wisconsin - Milwaukee in United States

When are you allowed to refinance out of the SBA 7a debt? If anyone has any resources on this, it would be appreciated. Thanks!
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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
If you are looking to refinance an SBA 7A loan, technically you can refinance that loan at any time. First off, if your SBA 7A loan term is under 15-years, then there is no prepayment penalty on the loan. If the loan term is 15-years or longer, then there is a declining prepayment penalty of 5% in Year 1, 3% in Year 2, and 1% in Year 3. After that there is no formal penalty. However, on SBA 7A loan products, if you prepay 20% or more of the loan without giving the lender 21-days or more advance notice, they can charge you 21 days of interest on the portion repaid. So if you plan to payoff your loan, request the payoff letter 21 days in advance. If you are looking for more traditional financing and the funds were used to acquire a business, most conventional lenders will want to see typically two years of tax returns since you took over before refinancing. Also, keep in mind most conventional lenders offer shorter loan terms, in the 5 to 7 year range, so you need to have the debt paid down or have cash flow that supports a shorter loan term. You can refinance into another SBA 7A loan if you like. In order to do so, you need to have a 10% or greater payment savings with the refinance. That payment savings can be achieved by a lower interest rate, a longer amortization, or both. I hope this information helps. We have successfully helped other businesses refinance out of SBA loans or refinance into better priced SBA loans once the transaction risk is gone. If you want to see what you might qualify for we would be happy to take a look. You can reach me here or directly at redacted
commentor profile
Reply by a lender
from University of Missouri in Denver, CO, USA
The key is you must be saving 10% on your payment. I'm happy to discuss and answer any further questions
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