What does current mean for an SBA refinance?
Short answer
Debt must be current for at least the last 12 months or the life of the loan, whichever is less. Current means no required payment stayed unpaid for more than 29 days (SOP 50 10 8.1, App. 14, Para. A). A loan unpaid 29 days past maturity is not current.
Current means no required payment has remained unpaid for more than 29 days (SOP 50 10 8.1, App. 14, Para. A). The debt must be current for at least the last 12 months or the life of the loan, whichever is less.
Maturity is a hard stop
A loan that matured and was not paid within 29 days of the maturity date is not current and is not eligible for refinancing. That matters for balloon notes, which otherwise qualify.
Late payments may still need explaining
A payment made within 29 days keeps the debt current. On a Standard 7(a), the credit memorandum must still include a written explanation for any late payments over the past 12 months (Sec. B, Ch. 1, Para. C).
For same-institution debt, the lender must provide a transcript for the prior 36 months, or the life of the loan if shorter. It must explain in writing any late payments and late charges in that period (App. 14, Para. A.4.d).
How the lender proves it
Lenders must keep copies of notes and transcripts for the most recent 12 months, or other documentation of the debt (App. 20, Para. A).
Other programs
A 504 refinance with expansion requires payments no more than 30 days in arrears for 1 year before SBA approves the loan (Sec. C, Ch. 1, Para. C.11.b.vii). An existing 7(a) or 504 loan that is not current when the new loan number issues makes the business ineligible (Sec. A, Ch. 1, Para. E).
Sources
- SOP 50 10 8.1, App. 14, Para. A, General Requirements, Paras. A and A.4.d (p. 355)
- SOP 50 10 8.1, Sec. B, Ch. 1, Para. C, Credit Standards, late payment explanation (p. 118)
- SOP 50 10 8.1, App. 20, Para. A, Debt Refinancing (p. 416)
- SOP 50 10 8.1, Sec. C, Ch. 1, Para. C.11.b.vii (Para. C begins p. 226)
- SOP 50 10 8.1, Sec. A, Ch. 1, Para. E, existing 7(a) or 504 loan not current (Para. E begins p. 18)
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