The SBA 7(a) loans can help small business owners refinance existing debt into loans with lower payments and/or longer terms so long as a number of basic requirements are met, including:
- The debt to be refinanced must have been exclusively for business purposes
- The loan can’t be used to refinance business debt that’s already determined to be on reasonable terms
- A loan can’t be used to shift all or part of a potential loss to the SBA
- The debt to be refinanced must have a purpose that would have been eligible for SBA financing when it originated.
- If the debt to be refinanced was used in whole or in part to refinance a previous debt, the current loan must be reported on your balance sheet for two full tax cycles before applying for an SBA 7(a) loan. Documentation to confirm all funds were used only for an eligible business purpose is required
- Individual lenders might have additional restrictions