# Which debts skip the SBA 10 percent payment test?

**Short answer:** Four types are excepted: demand notes and balloon debt, business credit cards, home equity lines of credit (HELOCs) used for business, and certain revolving lines. The lines are ones the lender will not renew or that you restructure (SOP 50 10 8.1, App. 14, Ten Percent Improvement).

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Last checked: 2026-11-08

Four debt types are excepted from the test in Appendix 14, Paragraph A of SOP 50 10 8.1:

1. Debt, short-term or long-term, structured with a demand note or balloon payment
2. Credit card obligations used for business-related purposes
3. Home equity lines used for business-related purposes
4. Revolving lines the original lender is unable or unwilling to renew, or that you restructure for a lower rate or longer term

## What is not on the list

Other debts must clear the test. That includes a term loan from another lender (App. 14, Para. A.1.j says so directly), a seller note (App. 15, Para. A.3.a) and a converted merchant cash advance. Debt above SBA's maximum rate and debt with an inappropriate maturity are eligible types, but neither is listed as an exception.

## Other tests still apply

Excepted debts must still be current for at least the last 12 months or the life of the loan, whichever is less. SBA-guaranteed loans may not pay a creditor in a position to sustain a loss. A balloon that matured and was not paid within 29 days of maturity is not current and cannot be refinanced (App. 14, Para. A).

## The 504 parallel

A 504 debt refinance with expansion treats balloons the same way. Loans with balloon payments meet the Substantial Benefit test independent of the reduction requirement (Sec. C, Ch. 1, Para. C.11.b.vi).

## Sources

- [SOP 50 10 8.1, App. 14, Para. A, General Requirements, Ten Percent Improvement to Installment Payment Amount (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, Sec. C, Ch. 1, Para. C.11, Permissible Debt Refinancing with Expansion (Para. C begins p. 226)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)