# Refinancing and consolidating business debt

Source: https://businessloanbroker.ai/situations/refinance-business-debt/
Site: BusinessLoanBroker.ai (powered by Levr)

> You can refinance expensive business debt into a term loan or SBA 7(a) if cash flow covers the new payment. Who will consider it and what it costs.

You can refinance expensive business debt into one cheaper payment if the business still has the cash flow to cover it and you stop adding new debt while you work on it. [Term loans](https://businessloanbroker.ai/business-loans/term-loans/), [SBA 7(a) loans](https://businessloanbroker.ai/business-loans/sba-7a-loans/) and, for equipment and property, refinances against the asset are the usual tools. The hard truth: a business with three stacked advances and falling deposits usually cannot refinance until it pays at least one off, because no lender wants to be the fourth.

## Key facts
- **Will consider you:** SBA 7(a) lenders, bank and online term lenders, equipment and real estate refinance lenders
- **Will decline you:** Most lenders when three or more advances are open, or when deposits are falling
- **Typical cost premium:** None if it works: the goal is a lower rate and a longer term than what you have
- **Fastest realistic timeline:** 1 to 2 weeks for a term loan, 45 to 90 days for SBA
- **What improves odds:** Payoff letters, three months with no new debt, stable deposits

## Can you refinance business debt?

Yes, if the new payment is affordable and the lender can see it is affordable. Lenders refinance when the result improves your cash flow, typically by cutting the monthly payment by 10% or more. SBA 7(a) allows refinancing of business debt when the existing terms are unreasonable, which includes most advances and short term loans, and when the new loan improves cash flow meaningfully.

You usually cannot refinance when the debt is the symptom of a business that is losing money, when there are three or more advances, or when deposits have fallen for three months. In those cases the first step is stabilizing the business, not another loan. See [cash flow gaps](https://businessloanbroker.ai/situations/cash-flow-gap/) for the short term options.

## Which products will consider you, ranked by fit

Ranked by the quality of the outcome:

- SBA 7(a): the best result, a ten year term at prime plus a set spread, which can cut the payment on advances by half or more.
- A bank term loan, for businesses with two years of returns and credit above 680, consolidating one or two loans.
- An online term loan over two to five years, faster and more lenient, consolidating advances for businesses with steady deposits.
- [Equipment refinancing](https://businessloanbroker.ai/business-loans/equipment-financing/) or a sale leaseback, borrowing against equipment you own outright to pay off expensive debt.
- A [commercial real estate](https://businessloanbroker.ai/business-loans/commercial-real-estate-loans/) cash out refinance if the business owns its building.
- Reverse consolidation, which does not pay off your advances but spreads the payments; expensive, a last resort.

## Which products will decline you, so you stop wasting applications

Merchant cash advance companies will happily give you another advance, which is not a refinance and makes the problem worse. Most other lenders decline when they see three or more open advances, because a UCC search shows them and a new loan would sit behind them. Banks decline when the tax return shows a loss or the debt covered losses rather than purchases. Unsecured lenders decline when total debt payments already exceed a third of monthly deposits.

Equipment and real estate refinances decline when the asset has already been pledged under a blanket lien, which many advances and online loans file. Check your [UCC filings](https://businessloanbroker.ai/glossary/ucc-lien/) before you apply.

## How to improve your odds in 30, 90 and 180 days

In 30 days: stop taking new debt, full stop. List every loan and advance with its balance, payment and payoff amount, and request payoff letters. Build a simple cash flow summary showing current payments against deposits and what the payments would be after a refinance.

In 90 days: with three months of no new debt and stable deposits, apply to term lenders for a consolidation. Ask for a term that drops the total monthly payment by at least 20%. Make sure the new lender pays the old ones at closing and terminates their UCC filings.

In 180 days: with six clean months and a lower payment, apply to an SBA lender for a full refinance into a ten year term. Read [DSCR explained](https://businessloanbroker.ai/guides/dscr-explained/) so you can present the coverage the lender wants to see.

## What will it cost compared with a standard borrower?

A refinance that works costs less than what you have, which is the point. Moving $150,000 of advances at factor rates of 1.35 repaid over nine months into a five year term loan at 18% APR typically cuts the monthly payment by more than half. Moving it into SBA 7(a) at prime plus 3% over ten years cuts it further. Expect an origination fee of 1% to 5% on online term loans and an SBA guarantee fee of about 2% to 3.75% on the guaranteed portion.

The cost in flexibility is a longer commitment and often a lien on more assets; what it buys is a path back to bank pricing. Compare your current and proposed payments in the [business loan calculator](https://businessloanbroker.ai/tools/business-loan-calculator/) before you decide.

## How to apply

Apply once here with your bank statements, a list of current debts with payoff amounts, and your tax returns, and your application reaches SBA, bank, online term and asset refinance lenders together. Or connect your AI assistant to our MCP server through the [agents hub](https://businessloanbroker.ai/agents/) and let it read your statements and loan agreements, build the application and submit it. It is free to the business, and offers come back to the same place for comparison.

| Product | Amounts | Typical cost | Speed | Best for |
|---|---|---|---|---|
| SBA 7(a) refinance | $50,000 to $5M | Prime plus 3% to 6.5% | 45 to 90 days | The lowest payment, patient owners |
| Bank term loan | $25,000 to $1M | 7% to 12% APR | 2 to 6 weeks | Two years of returns, good credit |
| Online term loan | $10,000 to $500,000 | 12% to 35% APR | 1 to 2 weeks | Consolidating advances quickly |
| Equipment or property refinance | Against the asset's value | 7% to 15% APR | 1 to 6 weeks | Owners with unencumbered assets |

## Questions and answers
**Can I refinance a merchant cash advance?**

Yes, into a term loan or SBA 7(a) if your deposits are stable and you have no more than one or two advances open. The new lender pays the advance off at closing from the payoff letter. With three or more advances, most lenders decline until you pay at least one down, and the realistic path is finishing the shortest one.

**Will refinancing hurt my credit?**

Usually it helps within a few months. The application adds a hard inquiry, but replacing daily payments with one monthly payment improves your bank statements and your ability to pay everything on time. The bigger risk is doing nothing while the advances drain the account.

**Does SBA allow refinancing of existing debt?**

Yes, when the existing debt is on unreasonable terms, such as advances, short term loans or balloon notes, and the new loan improves cash flow substantially. The lender documents the original purpose and the improvement. Debt already on an SBA loan with the same lender has extra rules.

**Should I consolidate or just pay the debt down?**

If the payments are manageable and the debt will be gone within six months, paying it down is cheaper than a new origination fee. If daily payments are causing negative balance days or you are considering a new advance to cover them, consolidate now. The test is whether the current payments fit in your monthly deposits with room to spare.

## Related
- [Business term loans](https://businessloanbroker.ai/business-loans/term-loans/)
- [SBA 7(a) loans](https://businessloanbroker.ai/business-loans/sba-7a-loans/)
- [Merchant cash advances](https://businessloanbroker.ai/business-loans/merchant-cash-advance/)
- [DSCR explained: the cash flow test lenders use](https://businessloanbroker.ai/guides/dscr-explained/)

## Apply
Apply for the business: https://apply.businessloanbroker.ai/signup?utm_source=direct&utm_medium=organic&utm_content=md-refinance-business-debt
MCP server for AI agents: https://mcp.businessloanbroker.ai/mcp (docs: https://businessloanbroker.ai/agents/mcp/)