When Proactive Business Debt Refinancing Matters
When Proactive Business Debt Refinancing Matters
If high-interest loans or unmanageable payments are draining your business’s cash flow, or if you’re considering an acquisition or expansion loan while juggling multiple debts, it might be time to consider debt refinancing. With the SBA’s new SOP 50 10 8 updates coming into effect on June 1, 2025, businesses have new opportunities to refinance debt with better terms, but navigating these changes can be challenging. LoanBox is here to simplify the process.
Here’s everything you need to know about business debt refinancing, its benefits, and how LoanBox can help you find the right solution.
Why Consider Debt Refinancing?
Debt refinancing isn’t just a financial tactic—it’s a lifeline for survival and growth in today’s high-rate environment. Excessive debt accounted for 41% of small business loan denials in 2024, while weak financials led to 76% of rejections (2024 Federal Reserve Small Business Credit Survey). Refinancing helps restructure debt to meet lender standards, such as maintaining a debt service coverage ratio (DSCR) above 1.15.
With an SBA refinance loan, you can replace existing debt with a new 7(a) or 504 loan, offering lower interest rates, longer terms, and simplified payments. Here’s how refinancing can benefit your business:
Cost Savings: Lower rates and fees (SBA guaranty fees range from 0.25–3.75%) can save your business thousands over time.
Cash Flow Relief: Extend short-term loans (e.g., 5 years) to 10 years, reducing monthly payments by 20–30%.
Debt Consolidation: Combine multiple loans, such as credit card debt at high interest rates, into one manageable payment.
Growth Opportunities: Free up cash flow for growth, whether through acquisitions, hiring, or new investments.
Refinancing proactively can also help you avoid loan denials and stabilize your financial health before seeking new funding.
What Debt Qualifies for SBA Refinancing in 2025?
The SBA’s updated refinancing rules focus on strengthening businesses while preventing abuse. Eligible debts must be at least two years old (unless short-term), current on payments, and offer a “substantial benefit,” such as a 10% reduction in monthly payments or the elimination of balloon payments. Examples of eligible debt include:
Business Loans: Operational, equipment, or expansion loans with unfavorable terms.
Commercial Real Estate Debt: Mortgages or property loans, especially with balloon payment risks, can be refinanced through 504 loans with terms up to 25 years.
Business Credit Card Debt: High-interest credit card debt used for verified business expenses.
Existing SBA Loans: Older 7(a) or 504 loans in good standing may be refinanced for better terms.
What Debt Is Not Eligible for SBA Refinancing?
To protect businesses from harmful debt cycles, the SBA excludes the following from refinancing:
Merchant Cash Advances (MCAs): High-cost advances with daily repayments are banned under the new rules.
Personal Debt: Home mortgages, personal credit cards, and non-business loans are excluded.
Delinquent Federal Debt: Loans with IRS liens or defaulted government obligations are ineligible.
Speculative or Non-Business Debt: Loans for investments, gambling, or other ineligible activities.
Special Considerations for Personal Debt Used for Business
Personal debt used for business purposes can sometimes be refinanced, but it requires strong documentation. For example:
Eligibility: Debt must be verifiably business-related, with receipts, statements, or tax records (e.g., interest listed on Schedule C).
Verification: Only the business portion of personal loans, such as HELOCs or credit cards, can be refinanced.
Collateral Options: HELOCs tied to home equity may serve as collateral, avoiding liens on primary residences.
LoanBox advisors can guide you through this process, ensuring you meet eligibility requirements and strengthen your application.
How LoanBox Simplifies Business Debt Refinancing
Refinancing business debt can feel overwhelming, but LoanBox makes it simple and efficient. With our advanced platform, you can streamline the process and get matched with the right lender, fast.
Here’s how it works:
Sign Up: Access our user-friendly platform for free.
Provide Details: Answer a few questions about your business, debts, and refinancing goals.
Upload Documents: Submit the necessary financial documentation.
Lender Matching: LoanBox’s AI matches you with lenders based on criteria like loan purpose, business performance, and industry.
Review Proposals: Compare loan offers and choose the best fit for your needs.
Track Progress: Stay updated on your application status with real-time alerts and clear guidance.
Need help? A dedicated LoanBox advisor can handle the entire process for you, making refinancing as stress-free as possible.
Why Choose LoanBox?
With debt refinancing making up 24% of small business loans and excessive debt causing 41% of denials, getting it right is critical. LoanBox helps you navigate the complexities of SBA refinancing, so you can confidently restructure your debt, improve cash flow, and focus on growing your business.
Think inside the LoanBox if you're re-thinking current debt.