SBA Loan Refinance Options and Best Practices

searcher profile

January 14, 2025

by a searcher from Duke University in Tulsa, OK, USA

I closed on an SBA 7(a) loan a year ago, structured with a 25-year amortization, through a local regional bank. Over the past year, I have significantly increased the company’s discretionary earnings to approximately $900K. The loan is fully collateralized based on the fair market value of real estate and equipment. However, I’ve grown increasingly frustrated with my current bank for a variety of reasons. As my prepayment penalty is set to drop to 1%, I am planning to refinance.

I am exploring options to refinance my loan with the goal of securing a lower interest rate compared to the current prime-based terms. Ideally, I’d prefer another 25-year amortization, potentially through an SBA or USDA loan.

Specific questions I have include:

Is it possible to refinance without incurring another SBA guarantee fee?

Are there pathways to eliminate the personal guarantee (I know with SBA and USDA this is required), or is this unrealistic given my current discretionary earnings and collateralization?
What strategies or tips would you recommend for achieving the best possible outcome during the refinancing process?
While I have approached my current bank about lowering the rate, they have refused to do so, compounding my frustrations with their service. I am eager to transition to a lender who aligns better with my long-term goals.

I’d appreciate any insights or recommendations on how to proceed effectively.

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commentor profile
Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Great questions. It would likely be a challenge to refinance without a personal guarantee. You may be able to get a limited guarantee done. You can look at multiple options for refinancing, like using an SBA 504 loan for the real estate which would provide a long-term fixed rate on a portion of the debt. There are plenty of conventional lenders that would look at it as well if fully collateralized. We could look at various structures for you. If you were to do another SBA 7A loan you would have to meet savings parameters and would have to pay the SBA guarantee fee. So that may not be the best option for you, but if you can get enough of an interest rate savings it might be worth looking at. You can reach me here or at redacted if you would like to discuss options.
commentor profile
Reply by a lender
from University of Southern California in Los Angeles, CA, USA
Your deal is too small to eliminate PG. Refinancing to conventional is possible but hard at your stage. If you are looking to refinance SBA variable to SBA fixed it’s possible. Would love to help you with your SBA loan refinance. Moving to fixed rate, your loan can be fixed to 7.99%. You can click here to schedule a meeting with me: https://cal.com/ishan-jetley-3d73m8/30min. Look forward to chatting!
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