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Can You Use SBA Express Loans to Refinance Business Debt?

If you currently have small business debt, an SBA Express loan can be a great way to refinance it. While it’s common for businesses to take on debt to expand their operations, if your debt is on unreasonable terms, and you have trouble affording your monthly payments, the debt could be significantly affecting your ability to run your business successfully.

When Can Businesses Refinance Debt With An SBA Express Loan?

  1. The debt must have been used for an SBA-eligible purpose: This means that your business must have made purchases with the debt that they would have been able to make with an SBA loan. These include buying real estate, purchasing an existing business, funding working capital, and buying equipment.

  2. The debt must be on unreasonable terms: Certain balloon loans, loans with interest rates much higher than SBA maximums, and high-interest rate credit cards may all be classified as unreasonable by the SBA.

  3. The business will benefit from the refinancing: Since refinancing debt is not the main or stated purpose of the SBA Express loan program, a business will have to demonstrate that the refinance will put the business in a better financial position, perhaps helping it free up the cash to expand or hire new employees.

How to Refinance Debt With an SBA Express Loan

If you want to refinance debt with an SBA Express loan, you’ll need some documentation, which usually includes:

  • Any relevant documents involving the debt you want to refinance (including the loan’s terms, balance, and lender)

  • Statements/projections that can demonstrate your business will benefit from the refinance

  • Documents showing the initial purpose of the debt you want to refinance

Refinancing Credit Card Debt With an SBA Express Loan

If you have business credit card debt, you may also be able to refinance this with an SBA Express loan. However, you’ll need to make sure that all the charges on the credit card were for business, not personal uses, and you may need to provide additional collateral to compensate for the additional risk that refinancing credit card debt may entail.