SBA Loan Refinancing: Complete Guide for 2026

What Is SBA Loan Refinancing and How Does It Work?

SBA loan refinancing allows small business owners to replace existing high-interest debt with a new, lower-rate loan backed by the U.S. Small Business Administration. If you are paying above-market rates on commercial real estate debt, equipment loans, or business lines of credit, SBA loan refinancing through the 7(a) program or the 504 program could save you thousands per month while extending your repayment terms.

The SBA does not lend directly. Instead, it provides a partial government guarantee (up to 85%) to approved lenders, which reduces risk and allows those lenders to offer more favorable terms. For borrowers, that translates to lower rates, longer terms, and smaller down payments compared to conventional commercial financing.

Whether you are looking to consolidate multiple business debts, escape a balloon payment, or simply lock in a better rate on your commercial real estate, this guide covers every aspect of SBA loan refinancing in 2026, including the latest rules, rates, eligibility criteria, and step-by-step instructions for getting approved.

Which SBA Program Should You Use for Refinancing?

The right program depends on your debt type, property ownership, and financial goals. The two primary SBA refinancing vehicles are the 7(a) loan and the 504 loan, and each serves a distinct purpose.

SBA 7(a) Refinancing is the more flexible option. It allows you to refinance a wide variety of business debts, including commercial mortgages, equipment loans, business lines of credit, and even some short-term merchant cash advances. The maximum loan amount is million, with terms up to 25 years for real estate and up to 10 years for other business debt.

SBA 504 Refinancing is specifically designed for owner-occupied commercial real estate and major fixed assets (heavy equipment worth ,000 or more). The 504 program offers below-market fixed rates on the CDC (Certified Development Company) portion of the loan, which makes it an excellent choice for businesses that own their property and want long-term rate stability.

For business owners carrying high-interest real estate debt, the SBA 504 refinance program often produces the largest monthly savings because of its fixed-rate CDC debenture, which is pegged to Treasury rates rather than the prime rate. If your debt is more diverse (a mix of real estate, equipment, and working capital), the 7(a) program provides the flexibility to consolidate everything under one loan.

Use our commercial mortgage calculator to compare your current payment against projected SBA refinance payments.

What Are the Current SBA Refinancing Rates in 2026?

SBA 7(a) variable rates currently range from approximately 8.0% to 10.5%, while SBA 504 fixed rates on the CDC portion are approximately 5.0% to 6.0%. These rates represent significant savings compared to private lending alternatives.

SBA 7(a) interest rates are tied to the prime rate (currently around 7.5% as of early 2026) plus a spread that depends on the loan amount and maturity:

• Loans over ,000 with terms under 7 years: Prime + up to 1.5%
• Loans over ,000 with terms of 7+ years: Prime + up to 1.75%
• Loans ,001 to ,000: Prime + up to 2.25%
• Loans ,000 or less: Prime + up to 2.75%

SBA 504 rates are set monthly based on the sale of pooled CDC debentures, which are backed by Treasury bonds. The 504 rate structure includes a first mortgage from a bank (typically 50% LTV at market rates), a CDC second mortgage (up to 40% LTV at the below-market debenture rate), and a borrower down payment of at least 10%.

For businesses currently paying 10% to 15% on conventional or private debt, refinancing into an SBA loan can reduce the effective rate by 2 to 4 percentage points, producing substantial savings over the life of the loan.

Contact Clear House Lending for a personalized rate quote based on your current debt structure and financial profile.

Who Is Eligible for SBA Loan Refinancing?

To qualify, your business must be a for-profit entity operating in the United States, meet SBA size standards, and demonstrate the ability to repay the new loan from business cash flow. Beyond these baseline requirements, each program has additional criteria.

General SBA Eligibility Requirements:

• The business must be for-profit and legally operating in the U.S.
• The business must meet SBA size standards (varies by industry, generally under million net worth and under million average net income for 504 loans)
• The borrower must have invested equity (not be fully leveraged)
• The borrower must have explored other financing options (the SBA is a lender of last resort)
• No delinquencies on existing government debt

Additional 504 Refinance Requirements:

The SBA also requires that refinancing provide a "substantial benefit" to the borrower. For 7(a) refinances, this typically means a reduction in the interest rate of at least 1% or a reduction in monthly payments of at least 10%. For 504 refinances, the existing debt must be at least 6 months old and the new loan must not exceed 90% of the appraised value.

Check your property's debt service coverage using our DSCR calculator to confirm you meet the minimum 1.15x threshold most SBA lenders require.

How Does the SBA 504 Refinance Without Expansion Program Work?

The 504 Refinance Without Expansion program allows business owners to refinance existing commercial real estate debt even when they are not planning a new construction project or business expansion. The program was made permanent by Congress and provides a valuable path for businesses that want to take advantage of SBA 504 rates without any expansion component.

Under this program, the maximum refinance amount is 90% of the appraised fair market value of the property. The structure follows the standard 504 format: a first mortgage from a conventional lender (up to 50% LTV), a CDC second mortgage (up to 40% LTV), and the borrower's existing equity serving as the down payment.

Key rules for the 504 Refinance Without Expansion:

• The existing debt being refinanced must have been for an eligible 504 purpose (purchasing or improving the real estate or heavy equipment)
• The loan must have been current for the 12 months before the application date
• The original loan must be at least 6 months old
• Cash-out is limited to the lesser of 20% of the appraised value or the remaining eligible project costs
• The borrower must occupy at least 51% of the property

The 504 Refinance With Expansion option is also available for businesses that want to combine debt refinancing with a new expansion project. Under this option, the refinance portion of the loan cannot exceed 50% of the total project cost.

What Is the SBA Express Refinance Program?

The SBA Express Refinance program offers a faster alternative for businesses that need to refinance smaller loan amounts quickly. SBA Express loans are capped at ,000, but the major advantage is turnaround time, with the SBA providing authorization decisions within 36 hours.

SBA Express loans carry slightly higher maximum interest rates than standard 7(a) loans. For loans over ,000, the maximum rate is prime plus 4.5%, and for loans of ,000 or less, the maximum is prime plus 6.5%. The SBA guarantee on Express loans is 50% (compared to 75-85% on standard 7(a) loans), which means lenders may apply somewhat stricter underwriting criteria.

The Express Refinance program is best suited for businesses that:

• Need to refinance ,000 or less in business debt
• Want a faster approval timeline
• Have strong financials and credit (680+ score recommended)
• Are willing to accept slightly higher rates in exchange for speed

For borrowers who qualify for standard 7(a) or 504 programs, those options will almost always provide better rates and terms. The Express program fills a niche for time-sensitive refinancing situations.

What Does the SBA Refinancing Application Process Look Like?

The SBA refinancing process typically takes 8 to 12 weeks from application to funding. While this is longer than conventional refinancing, the lower rates and longer terms make the wait worthwhile for most borrowers.

Documentation Required:

• 3 years of business and personal tax returns
• Year-to-date profit and loss statement and balance sheet
• Business debt schedule listing all existing debts
• Personal financial statement (SBA Form 413)
• Business plan or description of operations
• Commercial property appraisal (ordered during underwriting)
• Environmental assessment (Phase I, sometimes Phase II)
• Copies of existing loan documents being refinanced
• Lease agreements (if applicable)

Tips for a Smoother Application:

Organize your financial documents before approaching a lender. Incomplete packages are the number one cause of delays in SBA lending. Work with a lender experienced in SBA refinancing, as the process has nuances that generalist lenders may not navigate efficiently.

Contact Clear House Lending for a free consultation. Our team specializes in SBA refinancing and can pre-qualify your deal before you invest time in the full application.

How Much Can You Save by Refinancing Into an SBA Loan?

Most businesses save between ,500 and ,000 per month by refinancing high-interest debt into an SBA loan, depending on the loan amount and rate differential. Over a 25-year term, those monthly savings can total hundreds of thousands of dollars.

Consider this example: A business owner has a .2 million commercial real estate loan at 11% interest with 15 years remaining, resulting in monthly payments of approximately ,600. By refinancing into an SBA 504 loan at an effective blended rate of 7.5% over 25 years, the new monthly payment drops to approximately ,850. That is a savings of ,750 per month, or ,000 per year.

Of course, refinancing involves closing costs. SBA refinancing closing costs typically range from 2% to 5% of the loan amount.

The break-even point (when cumulative savings exceed closing costs) is usually reached within 6 to 14 months for most SBA refinances. After that point, every dollar saved goes directly to your bottom line.

Use our DSCR calculator to model your projected payment savings, or contact us for a detailed analysis of your specific situation.

What Debts Can Be Refinanced With an SBA Loan?

Nearly any type of legitimate business debt can be refinanced through the SBA 7(a) program, while the 504 program is limited to real estate and heavy equipment debt. Here is a breakdown of eligible debt types by program.

SBA 7(a) Eligible Debts:

• Commercial real estate mortgages
• Equipment loans and leases
• Business lines of credit
• Business credit card debt (when used for business purposes)
• Merchant cash advances
• Seller financing or owner-carried notes
• Partner buyout financing
• Existing SBA loans (under certain conditions)

SBA 504 Eligible Debts:

• Commercial real estate mortgages (owner-occupied)
• Heavy equipment loans (assets worth ,000+)
• Loans originally used to purchase or improve eligible fixed assets

One important restriction: you generally cannot refinance an existing SBA loan with another SBA loan unless you can demonstrate a compelling business reason, such as a significant rate reduction or the consolidation of multiple SBA loans into one. The SBA does not want its guarantee program used for serial refinancing.

Learn more about commercial loan down payment requirements across different loan types to understand how SBA programs compare.

What Are Common Reasons SBA Refinancing Applications Get Denied?

The most common denial reasons are insufficient cash flow, credit issues, and incomplete documentation. Understanding these pitfalls in advance gives you the best chance of approval.

Top Denial Reasons:

1. DSCR below 1.15x. If your property or business cannot generate enough income to cover the new loan payment with a minimum 1.15x cushion, most SBA lenders will decline. Address this by paying down other debts or demonstrating income growth trends.

2. Credit score below 650. While the SBA does not set an official minimum credit score, most participating lenders require at least 650, and many prefer 680 or higher. Clean up any derogatory marks before applying.

3. Insufficient time in business. Most SBA lenders want to see at least 2 years of operating history. Startups and very young businesses are better served by other SBA programs (like microloans) rather than refinancing.

4. Incomplete documentation. Missing tax returns, outdated financial statements, or an incomplete debt schedule can delay or derail your application. Prepare a complete package before submitting.

5. No substantial benefit. The SBA requires that refinancing provide a meaningful improvement. If your rate savings are marginal or the new terms are not materially better, the SBA may not authorize the loan.

6. Delinquent government debt. Any existing delinquency on federal debt (including student loans, tax liens, or prior SBA loans) is an automatic disqualifier until resolved.

If you have been denied, do not lose hope. Many denial reasons are fixable with the right strategy. Contact Clear House Lending for a free review of your situation. With access to over 6,000 commercial lenders, we can often find a path forward even when traditional banks say no.

Frequently Asked Questions About SBA Loan Refinancing?

Can I refinance a conventional loan into an SBA loan? Yes. This is one of the most popular uses of SBA refinancing. You can refinance conventional bank loans, credit union loans, private lender debt, and even hard money loans into an SBA 7(a) or 504 loan, provided the original debt was used for an eligible business purpose.

How long does SBA refinancing take? The standard SBA 7(a) or 504 refinancing process takes 8 to 12 weeks from application to closing. The SBA Express program can close in as few as 4 to 6 weeks for loans up to ,000.

Is there a prepayment penalty on SBA refinance loans? For SBA 7(a) loans, there is a prepayment penalty only during the first 3 years (5% in year 1, 3% in year 2, 1% in year 3, then 0%). For SBA 504 loans, the CDC debenture portion carries a declining prepayment penalty over approximately 10 years.

Can I take cash out when I refinance with an SBA loan? The SBA 7(a) program allows limited cash-out for working capital when combined with a refinance. The 504 Refinance Without Expansion program limits cash-out to 20% of the appraised value. Cash-out must be used for eligible business purposes.

What credit score do I need for SBA refinancing? While the SBA does not mandate a minimum score, most participating lenders require 650 at minimum, with 680 or higher preferred. Borrowers with scores below 650 may still qualify through specialized SBA lenders.

Can I refinance if my business lost money last year? It is possible but more challenging. Lenders want to see a clear path to positive cash flow. If your most recent year shows a loss, you will need to demonstrate strong year-to-date performance and provide a convincing explanation for the prior loss.

Do SBA refinance loans require a down payment? If you already own the property or asset being refinanced, your existing equity typically serves as the down payment. For 504 refinances, you need at least 10% equity in the property. No additional cash injection is required if your equity meets the minimum threshold. See our guide on commercial loan down payment requirements for more details.

Can I refinance an SBA loan with another SBA loan? In limited circumstances, yes. The SBA allows refinancing of existing SBA debt when there is a compelling business justification, such as consolidating multiple SBA loans into one or converting from a variable rate to a fixed rate with meaningful savings.

What Should Your Next Steps Be?

SBA loan refinancing can transform your business finances by replacing expensive debt with affordable, long-term SBA financing. The key is working with a lender who understands the SBA process and can guide you through the application efficiently.

Here is what to do next:

1. Calculate your potential savings. Use our commercial mortgage calculator to compare your current payments against projected SBA rates.
2. Check your DSCR. Run your numbers through our DSCR calculator to verify you meet the 1.15x minimum threshold.
3. Gather your documents. Start collecting tax returns, financial statements, and your current debt schedule.
4. Talk to an expert. Contact Clear House Lending for a free, no-obligation consultation. We will review your debt structure, identify the best SBA program for your situation, and help you build a strong application package.

With the right preparation and the right lending partner, SBA refinancing can be one of the most impactful financial decisions you make for your business in 2026.

Sources:

• U.S. Small Business Administration, 504 Debt Refinancing Program (sba.gov)
• U.S. Small Business Administration, 7(a) Loan Program Overview (sba.gov)
• SBA Standard Operating Procedure 50 10 7.1
• Federal Register, SBA 504 Refinance Rule Updates
• National Association of Development Companies (NADCO), 504 Refinancing Guide
• Federal Reserve Economic Data (FRED), Prime Rate History