Glossary · The loan itself
Debt refinancing
In short
This involves taking out a new loan to pay off existing business debt, usually to get better terms, lower interest rates, or consolidate multiple debts. An SBA 7(a) loan can be used for this if it provides a substantial benefit.
What it means in a deal
If the target business has existing debt, you might use a 7(a) loan to refinance it as part of the acquisition. The SBA requires that this refinancing offers a "substantial benefit" to the business, like reducing monthly payments by at least 10%. Work with your lender to ensure the terms meet this requirement.
Official sources
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 — Lender and Development Company Loan Programs
U.S. Small Business Administration · SBA Standard Operating Procedure
Last checked 2026-06-15. Official sources control — verify before relying on any rule for a live deal.
Related terms
Common questions about Debt refinancing
- Is it possible to use an SBA 7(a) loan for business debt refinancing?
- What conditions must be met to use an SBA 7(a) loan for refinancing existing business debt?
- How is prior owner debt converted to equity treated for injection purposes?
- Can I use an SBA 7(a) loan to refinance existing business debt?
- Can an SBA 7(a) loan be used to refinance existing business debt?
- Can I use an SBA 7(a) loan to pay off personal debt?
Defined by CapBench SBA Intelligence — plain-English definitions for business buyers, lenders, advisors, and AI agents, grounded in public SBA rules and records. Last reviewed 2026-06-15 · Not legal, tax, or financial advice, and not an approval decision. Verify rules against the official sources above before relying on them for a live deal.
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