SBA rules · SOP 50 10 8.1
Can I get a new SBA loan if my current SBA loan is behind on payments?
No, an applicant is ineligible for a new SBA loan if it has an existing 7(a) or 504 loan that is not current, and an existing delinquent loan cannot be refinanced into a new SBA loan.
Quoted from SBA SOP 50 10 8.1Every quote checked word for word
In detail
- General eligibility: An applicant business is ineligible for a 7(a) or 504 loan if it has an existing 7(a) or 504 loan that is not current at the time of issuance of the new loan number, meaning a required payment has remained unpaid for more than 29 days.
- 7(a) debt refinancing: Debt to be refinanced with a 7(a) loan must be, and must have been, current for at least the last 12 months or for the life of the loan, whichever is less, and proceeds cannot be used to pay a creditor in a position to sustain a loss or shift a potential loss to the SBA.
- 504 debt refinancing: Under the 504 program, existing debt refinanced either with or without expansion must have been current on all payments due for not less than 12 months (or one full year) preceding the application or refinancing.
- Matured debt: A loan that has matured and has not been paid within 29 days of the maturity date is not current and is ineligible for refinancing.
- Delinquent federal debt: If an existing federal debt is unpaid for more than 90 days from the payment due date, it is classified as Delinquent Federal Debt, which renders the applicant and guarantors ineligible for 7(a) or 504 financing unless the debt is fully satisfied or an agency waiver applies.
The source
What the SOP says
“The business is ineligible if the Applicant business has an existing 7(a) or 504 loan that is not current at the time of issuance of the new 7(a) or 504 SBA loan number. “Current” means that a required payment has not remained unpaid for more than 29 days. A loan that has matured and not been paid within 29 days of the maturity date is not current and is not eligible for refinancing.
“The debt to be refinanced must be, and must have been, current for at least the last 12 months or for the life of the loan, whichever is less. “Current” means that a required payment has not remained unpaid for more than 29 days. A loan that has matured and not been paid within 29 days of the maturity date is not current and is not eligible for refinancing.
“SBA-guaranteed loan proceeds may not be used to pay a creditor in a position to sustain a loss (including the same institution’s debt). This includes any refinancing that will shift all or part of a potential loss from the original lender to the SBA.
“The Borrower has been current on all payments due for not less than 12 months preceding the date of application.
“An Applicant is not eligible for a 7(a) or 504 loan if the Applicant or any guarantor (except a Supplemental Guarantor) owes an outstanding nontax debt to the Federal Government, or any agency thereof, that is in delinquent status (hereafter referred to as “Delinquent Federal Debt”).
“A debt is in “delinquent status” when the debt has not been paid within 90 days of the payment due date.
Have a deal in mind?
Tell us about it and we will tell you how these rules apply, and which lenders finance deals like yours.
More on who and what is eligible
Can an ESOP get an SBA loan?Can an SBA loan finance a bail bonds company?Can an SBA loan finance a business in a foreign country?Can an SBA loan finance a business owned by a Native American tribe?Can an SBA loan finance a business run by a management company?Can an SBA loan finance a business that sells adult products?All SBA rules
Related reading
What Lenders Actually Look for in an SBA Acquisition LoanWhy SBA Loans Get Denied (And How to See It Coming)What Documents Do I Need for an SBA Loan? Complete Guide
This page quotes the SBA's Standard Operating Procedure 50 10 8.1. Lenders can ask for more than the SBA minimum. It is general information, not a loan approval or legal advice.