If you’ve taken on debt for your small business, you’re not alone. The latest Small Business Credit Survey found that roughly 87% of small businesses rely on financing—either loans or credit cards.

Debt can be necessary at times, but high interest rates can cut into your monthly profits. Having to juggle multiple payment dates can also be stressful, sometimes overwhelmingly so. With an SBA loan, small business owners can refinance their existing debts to simplify repayment and lower interest rates, turning financial strain into long-term stability.

Why refinancing makes sense for small businesses.

Whether you’re just starting or you’ve been in business for a while, refinancing your high-interest debts can be a smart move. That’s because interest charges can eat into operating margins, especially for businesses that rely on expensive financing options like:

With interest rates expected to remain elevated, small business owners are increasingly turning to SBA funding for relief. So far this year, the SBA has provided financing to nearly 80,000 small businesses via 7(a) and 504 loans with a total approval amount of $37 billion (including both financing and refinancing).

Here’s why refinancing with an SBA loan might make sense for your small business:

  • You could get a lower rate—This means less money spent on interest payments
  • It lowers your monthly payments—A lower rate or a longer repayment term could mean smaller monthly payments
  • It improves cash flow—The less you spend on your debts, the more cash you’ll have to maintain or expand your venture
  • Payments are easier to manage—Refinancing can consolidate business debts into one simply monthly payment for easier bookkeeping

How SBA loans work for refinancing.

SBA loans are business loans that are partially backed by the U.S. Small Business Administration. The SBA guarantees a certain percentage of these loans (between 50% and 90%), making them easier to get than other commercial financing. Rates and terms may also be more favorable.

SBA loans can be used to consolidate business debt or refinance existing loans, provided certain requirements are met. Common criteria include:

  • 165 minimum FICO Small Business Scoring Service (SBSS)
  • 650 minimum credit score
  • 2+ years in business
  • Sufficient revenue (varies)

The SBA has multiple programs for small businesses, but two of the most popular refinancing options are:

  • SBA 7(a) loans—The SBA’s most flexible loan program, SBA 7(a) loans, are often used to refinance multiple high-interest debts or commercial real estate loans‍
  • 504 loans—These loans are typically used to consolidate or refinance qualified debt, including fixed-asset loans like equipment or commercial real estate

Standard 7(a) loans range from $350,001 to $5 million and come with 10-year repayment terms (or 25 years for real estate refinancing). SBA loan interest rates may be fixed or variable, and the maximum variable rate is set every month according to the Wall Street Journal Prime Rate. Visit our quick guide for the most current SBA interest rates.

Repayment terms for 504 loans are also 10 to 25 years. Interest rates are fixed. Most loans cap out at $5.5 million, but may require up to a 10% down payment.

Before offering an SBA loan refinance, lenders must ensure it will improve your financial position. The new loan must get you a lower interest rate, a longer repayment term, or both.

You may need to meet other criteria, too. Say you want to refinance an installment loan with an SBA 504 loan. At least 75% of your original debt must have been used to purchase major equipment or commercial real estate. Verify any lender’s requirements before you apply.

Key benefits of SBA loan refinancing.

Refinancing business debt with an SBA loan comes with many benefits, like:

  • Lower interest rates—SBA loans often offer rates several points below traditional loans or merchant cash advances
  • Extended repayment terms—Spread payments over 10 to 25 years to improve cash flow for expansion or other operating costs
  • Single, simplified payments—Consolidate multiple debts into one predictable monthly payment
  • Improved credit profile—Consistent, on-time payments can help rebuild business credit

Take a restaurant owner who has the following business debts:

  • $50,000 installment loan with an 18% interest rate, five-year term, and $1,189 monthly payment
  • $30,000 equipment loan with a 15% interest rate, three-year term, and $1,040 monthly payment
  • $40,000 installment loan with a 14% interest rate, four-year term, and $1,093 monthly payment

The total monthly payment is $3,322.

If the restaurant owner takes out a $120,000 SBA loan with a 12% interest rate and a five-year term, they could use it to consolidate all three debts and reduce their monthly payment to $2,669.

Eligibility and requirements for SBA loan refinancing.

For an SBA loan refinance, you’ll typically need:

  • To be operating a U.S.-based, for-profit business
  • A business in good standing with reasonable credit history (personal and business)
  • To meet the SBA’s size requirements
  • A demonstrated ability to repay the loan

For refinancing, the existing debt must have been used for business purposes and originally structured on reasonable terms. Both the SBA and the lender will review your financials, tax returns, and business debt schedules.

Here’s a tip: Organize your documents early to speed up approval and demonstrate responsible financial management.

How to start the SBA loan refinance process.

Thinking about refinancing with an SBA loan? These are the general steps:

  1. Review all current debts, rates, and balances.
  2. Calculate potential savings from lower rates and longer terms.
  3. Work with a marketplace like Lendio to compare SBA lenders and programs.
  4. Make sure your business (and debts) meet any specific qualifications to refinance.
  5. Prepare documentation (financial statements, tax returns, debt schedules).
  6. Apply and wait for a decision.

Ready to get started? Find the refinancing you need on Lendio’s marketplace today.