Can a lender refinance its own 7(a) loan?

Only in two cases. Appendix 14, Paragraph A.4.f of SOP 50 10 8.1 lets a lender refinance its own 7(a) loan via delegated processing only if:

• It cannot modify the existing loan's terms because a secondary market investor will not agree, or
• An increase in the amount of the existing SBA-guaranteed loan is not possible.

All other conditions in Appendix 14 still apply. SOP 50 10 8 required these requests to go to SBA for non-delegated processing.

Program paths that work differently

• SBA Express to SBA Express. A lender can issue a new Express loan to refinance a current one before amortizing payments begin (Sec. B, Ch. 2, Para. B.3.b).
• SBA Express to Working Capital Pilot. SBA waived 13 CFR 120.452(a)(2) so lenders can refinance a same-institution Express loan into a pilot line (89 FR 57353). They use PLP-WCP authority.
• Export Working Capital Program (EWCP). Lenders may refinance existing 7(a) guaranteed loans, including their own where there are export sales. Only export collateral may be used to refinance same-institution debt (App. 14, Para. B.7).

Why the limits exist

Refinancing its own guaranteed loan can reduce a lender's exposure. A lender may not use delegated authority to do that (App. 14, Para. A.4.b). The existing loan must also be current. A business whose existing 7(a) or 504 loan is not current when the new loan number issues is ineligible (Sec. A, Ch. 1, Para. E).