How To Refinance SBA Loan Balances

Due to the unusual terms of lending, many business owners discover it is best to refinance SBA loan balances. Doing so, however, can be an involved process that requires diligence to garner the greatest savings along the way.

Step 1 - Determine Refinancing Need

Before diving into the process to refinance SBA loan instruments, it is best to carefully examine the situation. Short-term micro-loans, for example, might be best left alone unless the potential savings is substantial. If existing SBA loans are experiencing a large interest rate increase however, refinancing is probably for the best.

Step 2 - Consider Potential Lenders

There are generally two main options to choose from to refinance SBA loan balances. They are:

  • Private banking institutions - Small business loans not backed by the federal government might provide an option that offers better terms.
  • Other SBA lenders - It is possible to refinance SBA loan balances with another SBA lender, but the rules on this are rather strict. This type of refinance is quite difficult to obtain.
Step 3 - Apply for the New Loan

Once a lender has been identified and the need assessed, the final step in the process involves actually filing paperwork for the loan. It is imperative to fill out applications fully and truthfully.