SBA refinancing can help an eligible manufacturer replace unsuitable debt, but eligibility depends on the original use of funds, repayment history, loan terms and program. A lower advertised rate is not enough to establish that a refinance qualifies or improves the whole project.
| Debt/use | Program discussion | Documents |
|---|---|---|
| Eligible working-capital debt | 7(a); MARC only within its working-capital rules | Original note, use evidence, debt schedule and payment history |
| Eligible fixed-asset debt | Qualifying 504 refinance or 7(a) | Asset/project details, original proceeds, appraisal and payoff |
| Balloon or short-amortization loan | Applicable 7(a)/504 rules | Maturity, balloon amount and replacement payment schedule |
| Active MCA or factoring | Do not assume SBA refinancing is permitted | Full agreement and lender eligibility review |
Separate 7(a) and 504 benefit tests
Do not apply a 504 rule change to every 7(a) refinance. The lender must identify the controlling program and refinancing category, including payment-improvement requirements or exceptions, original eligibility and any same-institution-debt restrictions. Ask the lender to document the specific rule used.
Upcoming October rule for converted sales-based debt
Under SOP 8.1, effective October 1, 2026, a former sales-based repayment agreement such as an MCA is eligible for consideration only after conversion to a term loan, at least 24 months of amortization, and no additional such agreements since conversion. Active agreements remain ineligible; factoring is not eligible. Meeting this condition alone does not establish approval. Do not present it as a rule already in force in September.
Compare total cost—not just the monthly payment
Illustrative example: extending a five-year debt over ten years may lower monthly payments while increasing total interest. Build side-by-side schedules for the old payoff, new principal including financed fees, interest-rate assumptions, maturity and prepayment costs. Include any equity contribution and cash needed at closing.
- Obtain current payoff statements and original loan documents.
- Trace the original proceeds to business uses.
- List late payments, liens and any existing SBA debt.
- Reconcile the debt schedule to the balance sheet.
- Calculate annual debt service before and after, and stress-test variable rates.
- Have the lender confirm fees and program eligibility in writing.
For FY2026, the manufacturer upfront 7(a) fee waiver is limited to eligible loans of $950,000 or less and explicitly excludes MARC. It does not waive fees on a $3 million loan. The annual 0.55% SBA lender service fee cannot be passed to the borrower. See the FY2026 notice and our 2026/2027 fee guide for dates, exclusions and examples.
For fixed assets compare 7(a) and 504; for a combined growth plan see capital stacking. Use the application checklist to build the supporting file.
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