Can an SBA loan refinance a high-interest business loan?
Short answer
Yes, if it clears Appendix 14. Debt above SBA's maximum rate is an eligible type (SOP 50 10 8.1, App. 14, Para. A.1.b). The new payment must still be at least 10% less than the existing installment amounts in aggregate.
Yes, if the debt clears Appendix 14 of SOP 50 10 8.1. Paragraph A.1.b lists debt with an interest rate above the SBA maximum, based on size or term.
SBA's maximum
On variable-rate 7(a) loans, SBA's maximum is Prime plus 3.0 to 6.5 percentage points, depending on loan size (13 CFR 120.214(d)). Prime is 7.00% as of Nov 10, 2026. Compare that with the rate on your note, then ask your lender what pricing it would offer.
Debt below SBA's maximum can still qualify. Paragraph A.1.j covers other lenders' non-SBA debt if the new loan meets the payment test.
What still has to be true
- The debt must be current for at least the last 12 months or the life of the loan, whichever is less.
- The new payment must be at least 10% less than the existing installment amounts in aggregate. High-rate debt is not excepted from this test.
- SBA-guaranteed loans may not pay a creditor in a position to sustain a loss (13 CFR 120.201).
- You certify that the debt was used exclusively for the business (Sec. B, Ch. 6, Para. D.8).
Advances and factoring are different
A factoring agreement cannot be refinanced (App. 14, Para. A.2). An active merchant cash advance cannot either (Para. A.3). A high cost does not change that.
Credit elsewhere
The lender must still show you cannot get the credit on reasonable terms without SBA (Sec. A, Ch. 1, Para. H). The cost of your current debt is not one of the factors that paragraph lists.
Sources
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