Business Loan Refinancing: Types, Rates, Qualifications and How to Compare Lenders
Quick answer
Refinancing a business loan means paying off your current loan with a new one — ideally one with a lower rate, a longer term or a lower monthly payment. Most business loan types (term loans, SBA 7(a) loans, equipment loans, and some working capital loans) can be refinanced; SBA Microloans cannot, since their proceeds can’t be used to pay existing debt. Qualification typically depends on your personal credit score, business credit history, time in business and annual revenue.
- Refinancing can lower your interest rate, extend your term, reduce your monthly payment or improve repayment terms — but it only pays off if savings exceed the new loan’s fees.
- Not every loan type can be refinanced: SBA 7(a) loans explicitly allow refinancing existing business debt; SBA Microloans explicitly do not.
- A stronger personal credit score generally unlocks the best refinance rates; some online lenders will work with scores as low as 500 to 600, but at a higher cost.
Pros and cons of refinancing a business loan
Pros
- Can lower your interest rate and total cost
- Can lower your monthly payment by extending the term
- Can consolidate multiple debts into one payment
- May unlock better terms if your credit/revenue improved
Cons
- Existing loan may carry a prepayment penalty
- New loan may carry origination, underwriting or other fees
- Extending the term usually increases total interest paid
- Requires re-qualifying — won’t help if cash flow, not rate, is the problem
What types of business loans can you refinance?
Not all business financing is created equal when it comes to refinancing eligibility. Here’s how the major types compare:
| Loan Type | Typical Term | Can You Refinance It? | Notes |
|---|---|---|---|
| Term loan | Varies by lender, loan term and product | Yes | May be refinanced when a borrower can qualify for better rates or repayment terms |
| SBA 7(a) loan | Up to 300 months (real estate); 120 months or less otherwise | Yes | SBA explicitly lists “refinancing current business debt” as an eligible use, up to $5,000,000 |
| SBA 504 loan | 120 to 300 months | Yes | Refinancing permitted for debt that meets specific age and use requirements |
| SBA Microloan | Up to 84 months | No | Proceeds cannot be used to pay existing debts or purchase real estate |
| Equipment loan | Varies by asset life | Usually yes | Often refinanced alongside or separate from the underlying asset |
| Working capital loan/short-term loan | 24 months or less | Sometimes | Short terms and frequent (daily/weekly) payments make refinancing into a longer-term product common |
| Line of credit | Revolving | Not typically “refinanced” | Can be paid off and replaced with a term loan if a lump-sum payoff is preferred |
What are business loan interest rates right now?
Rates vary by loan type, lender and your credit profile, but current benchmarks based on LendingTree research and data from the Federal Reserve include:
| Business loan type | Interest rate |
|---|---|
| Bank term loans | Average fixed: 7.59% Average variable: 7.34% |
| Online lender term loans | Range: 4.66% to 35.26% |
| Bank lines of credit | Average fixed: 6.37% Average variable: 7.40% |
| Online lines of credit | Range: 0.55% to 39.6% |
| SBA 7(a) loans | Max rate range: 10.00% to 13.5% |
| Merchant cash advances | Range: 1.11 to 1.30 factor rate |
| Invoice factoring | Range: 0.55% to 5.00% discount rate |
How do you qualify to refinance a business loan?
Lenders evaluate refinance applications on largely the same criteria as a new loan:
- Personal credit score: Higher FICO scores typically unlock the best rates; some online lenders will consider scores as low as 500, though at a higher cost.
- Business credit score: Used alongside your personal score to assess overall creditworthiness.
- Time in business: Many refinance products require six months to two years of operating history.
- Annual revenue: Used to confirm your business can service the new debt.
- Collateral: May be required for secured refinance products, particularly at lower rates.
Documents to gather in advance:
- Proof of ownership or business license and EIN
- Personal and business bank statements and tax returns
- Balance sheets and profit-and-loss statements
- Current loan statements and business debt schedule
- Business plan and collateral valuation (if applicable)
Who are the best business loan refinance providers?
| Lender type | Best for | Typical speed | Credit flexibility |
|---|---|---|---|
| Banks/credit unions | Established businesses seeking the lowest long-term rates | Slower — days to weeks | Stricter; usually want higher FICO scores and 2+ years in business |
| SBA-approved lenders (via SBA Lender Match) | Businesses refinancing existing debt into an SBA 7(a) or 504 loan | Weeks, given SBA processing | Moderate; SBA sets eligibility floors, but rates/fees are negotiated with the lender |
| Online lenders and marketplaces | Businesses that need speed or don’t qualify at a bank | As fast as one business day | Most flexible; some lenders work with scores as low as 500, though rates run higher |
A note on comparing offers: don’t anchor on the advertised rate alone. Compare origination fees, prepayment penalties, payment frequency (monthly vs. weekly/daily) and total repayment cost side by side.
Step-by-step: How to refinance a business loan
- Determine how much you owe. Get your current balance, remaining term, payment schedule, rate and any prepayment penalty. Request a payoff quote.
- Set a refinancing goal. Lower payment (longer term) or lower total cost (lower rate) — know which one you’re optimizing for.
- Evaluate your qualifications. Check your personal and business credit scores, time in business, and annual revenue against typical lender minimums.
- Gather your financial documents. Tax returns, bank statements, balance sheets, profit and loss statements, and your business debt schedule.
- Get quotes from multiple lenders. Compare banks, SBA lenders and online marketplaces — a single application can surface several offers.
- Compare offers on total cost, not just rate — origination fees, prepayment penalties, term and payment frequency all matter.
- Accept and fund. Read the new loan agreement in full before signing, and confirm your old loan is paid off in full.
What if you don’t qualify to refinance?
If your credit, revenue or time in business falls short of refinance requirements, you’re not out of options — small-business owners discussing this exact problem on Reddit’s r/Businessloans and r/loansforsmallbusiness point to several paths:
- SBA Microloans for businesses needing under $50,000, with more flexible underwriting than traditional bank loans (though note: these cannot be used to refinance existing debt).
- CDFIs (Community Development Financial Institutions), which often work with startups and thinner credit files.
- Vendor or equipment financing, where the asset itself serves as collateral, sidestepping strict time-in-business requirements.
- Secured or 0% intro-APR business credit cards as a bridge while you build a stronger credit and revenue file.
- Waiting and rebuilding: paying down existing debt and documenting six to 12 months of consistent revenue often opens up better refinance terms later.
Frequently asked questions
There’s no universal waiting period, but many lenders want to see at least six months of payment history on your current loan and improved credit or revenue since origination.
Yes — SBA 7(a) loans explicitly allow refinancing existing business debt, and SBA 504 loans permit refinancing as well. SBA Microloans do not allow refinancing of existing debt.
A strong personal FICO score typically qualifies for the best rates. Some online lenders will consider scores as low as 500, though usually at a higher cost.
Applying generates a credit inquiry, and closing an old loan changes your credit mix and history length, but if refinancing lowers your rate or payment, the long-term benefit typically outweighs the short-term dip.
Possibly. Some business loans charge a prepayment penalty. Check your current loan agreement and include any penalty in your cost comparison.
Refinancing is harder without established credit or revenue, but SBA Microloans, CDFIs, vendor financing and secured business credit cards are common bridges business owners use while building a stronger file.
The bottom line
Refinancing a business loan can meaningfully lower your interest cost or free up monthly cash flow, but only if the new loan’s fees and terms beat what you’re paying now. Compare full loan types (not just rates), check whether your loan is even refinance-eligible, and shop multiple lender types — banks, SBA lenders and online marketplaces — before committing.
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