You Can Now Refinance Your SBA Loan With A New One

This Week in ETA:

Walker Deibel recently shared an observation from nearly two decades of buying and brokering businesses: you can usually tell within five minutes whether a buyer will ever close. He argues that most deals don’t die in diligence - they die much earlier, when buyers unknowingly disqualify themselves. How? By not being prepared to jump when it’s time to make a deal.

Common mistakes include: 1) not getting pre-qualified with lenders, 2) trying to eliminate all risk before acting, 3) buying owner-dependent businesses that are really just jobs, 4) obsessing over why the seller is exiting, 5) misunderstanding working capital and inventory, and 6) submitting offers without capital lined up.

The thread tying these together is preparation. Sellers and brokers care about certainty. If you can’t clearly show access to capital, understand the business model, and demonstrate you’re ready to take calculated risk, you’ll fall behind more credible buyers quickly.

And on that last point - submitting offers without capital lined up - there’s a big difference between saying “I believe I can raise the equity in three months” and “I’ve already met with an investor willing to provide a support letter.”

If you’re actively pursuing a deal and planning to use equity but haven’t connected with us yet, we’d be glad to talk. That level of preparation goes a long way with sellers and helps you stand out from the crowd of buyers.

Partner Perspective:

Matthias Smith, Pioneer Capital Advisory: You Can Now Refinance Your Existing SBA Loan with a New One

One of the more consequential changes buried in SOP 50 10 8, effective June 1, 2025 (the SBA’s most recent guidelines), is this: a borrower can now refinance an existing SBA 7(a) loan with a new SBA 7(a) loan from a different lender. For years, that path was effectively closed. The new SOP codifies it.

The qualifying condition most relevant to current borrowers is straightforward: the existing lender is unable or unwilling to increase the existing SBA loan or make a second loan, and the new loan produces at least a 10% reduction in the total monthly installment. That bar is very achievable right now for borrowers who closed acquisitions in 2021–2023 at shorter terms or higher rates, or who are carrying seller financed debt where most lenders want to see two years of current payments since closing before it is eligible to be folded into a new SBA loan.

What this means practically: if your current lender has been unresponsive to modification requests, or if rate adjustments have compressed your debt service coverage, you are no longer stuck. You can take your loan to market, find a lender willing to refinance under the new framework, and potentially improve your monthly cash flow in the process.

Alan Pacheco on our team leads Pioneer’s debt refinancing advisory work for current SBA borrowers. If you want to know whether your loan qualifies, reach out to him directly. You can email him at [email protected] or click here to set up time.

Plus:

• In partnership with Deal Prospectors, I outlined 7 reasons that your LinkedIn profile is losing you deals.

• Albrecht Law shared a list of the restrictive covenants a buyer should insist on.

Question:

Hit reply and tell us - What other mistakes keep searchers from closing deals?