Experience refinancing an SBA loan to Conventional?

February 20, 2026

by a searcher from Massachusetts Institute of Technology - MIT Sloan School of Management in Jersey City, NJ, USA

Hi, I am wondering if anyone has a POV on potential to use non-SBA loan to refinance out of an SBA loan. For example, if I reach 40-50% equity and want to lift liens and PGs are there financing tools available? Thanks in advance!

1 Like

4 Replies

135 Views

Replies

Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA

Great question. We have helped move many clients out of SBA financing into conventional financing over the years. However, there are a number of things to keep in mind when doing this. First, conventional lenders typically offer shorter loan terms. Usually general business debt is financed of 5 to 7 years (real estate debt of course longer). So you would need to be able to handle the higher loan payments. Secondly, many small business lending groups to lower middle-market lending groups at banks and credit unions (the divisions that would handle most SBA sized refinances) will not take on much unsecured loan exposure with conventional financing. So often times if the loan is not fully secured or close to secured by hard collateral, the institutions might not get comfortable with it or might want to put an SBA guarantee back on the debt. However, conventional lenders do put more weight to A/R and inventory as collateral versus the SBA which focuses primarily on equipment and real estate. Third, just about all conventional banks and credit unions require personal guarantees on small to mid-sized businesses loans. So you are unlikely to get out of a personal guarantee with your refinance. However, if may be able to get personal property removed from the collateral pool (like equity in your home) as most conventional lenders do not require that to be pledged. The have a path to that equity indirectly through your personal guarantee. Lastly, conventional bank lenders and credit unions do not offer the blended amortization or extended amortization you can get when you have real estate and business debt combined into an SBA 7A loan. So if you have both in one loan, they would likely need to be broken apart into separate loans conventionally, which could raise your required debt service. Although conventional financing is always an option, the metrics on the deal have to make sense. We have also refinanced a number of transactions into new SBA loans at better interest rates or even re-extending the amortization to help improve cash flow, so that is an option as well. Being able to refinance an SBA 7A loan into another SBA 7A loan is still somewhat new but is now allowed. If you have any questions or would like to get an assessment of options to refinance, please do not hesitate to reach out to me here or directly at redacted

Reply by an intermediary
from University of Virginia in Metuchen, NJ 08840, USA

Anecdotally, I have heard that after 2 years of on-time payments, some lenders may be willing to consider a conventional refinance if the business qualifies. However, conventional lending often relies on collateral that may not be available and on covenants that can create additional risk, so it may be worth discussing with your lender before going external.

+2 more replies.

Join the discussion