# Can an SBA loan refinance a seller note?

**Short answer:** Yes, after it has been in place and current for 36 months. The note must not be on standby during that period (SOP 50 10 8.1, App. 15, Para. A.3.a). The refinance must meet the payment test and must not reduce the lender's exposure.

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Last checked: 2026-11-08

Yes, once the note has seasoned. Seller debt can be refinanced after it has been in place and current for 36 months (SOP 50 10 8.1, App. 14, Para. A.1.g).

## The extra conditions in Appendix 15

The note must have been in place and current for that period after the change of ownership, and not on standby (App. 15, Para. A.3.a). The refinance must meet SBA's payment improvement test and must not reduce the lender's exposure.

A note on full standby may count as equity in the purchase (App. 15, Para. C.2.a). Full standby means no payments of principal or interest for the term of the 7(a) loan. Time on standby does not count toward the period above.

## What changed

SOP 50 10 8 required 24 months. SOP 50 10 8.1 lengthened the period, effective October 1, 2026.

## Collateral

When proceeds refinance change-of-ownership debt, the loan must be secured with at least the same collateral and lien priority as that debt (App. 15, Para. C.3).

## Debt tied to the sale itself

Debt used to buy a going concern is an eligible type (App. 14, Para. A.1.g). Paying off existing business debt as part of an Initial Acquisition is not refinancing under Appendix 14. It is part of the change of ownership and must meet Appendix 15 (Para. A.3.a).

## Sources

- [SOP 50 10 8.1, App. 14, Para. A, General Requirements, Para. A.1.g (p. 355)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, App. 15, Para. A.3.a, Debt Refinancing (Para. A begins p. 362)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8.1, App. 15, Paras. C.2.a and C.3 (Para. C begins p. 371)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [SOP 50 10 8 (Technical Updates, effective June 1, 2025), Debt Refinancing](https://legacy.sba.gov/sites/default/files/2025-05/SOP%2050%2010%208%20Technical%20Updates%20effective%206.1.2025.docx)