Debt Refinance Loans:

What kinds of debt are advisores refinancing?

Existing Notes Refinancing existing SBA or conventional loan notes.

Broker Dealer Notes Refinancing notes from broker dealers and platform providers.

Required Refinancing When notes with a lien may need to be refinanced with new acquisition loan.

Personal Investment Refinancing personal debt used for business purposes.

Seller Notes Refinancing existing seller promissory notes.

Existing EIDL Loan If an existing EIDL loan for over $25K the SBA has a lien on your business.

Does AdvisorLoans help advisors with refinancing business debt?

Yes. We help advisors with refinancing a specific business debt and with consolidating multiple business debts into one loan. Refinancing purposes include business credit cards, seller notes, business loans and credit lines, and personal expenses made for business use.

Can I refinance an existing seller note?

Yes. However, for SBA loans, the seller note must be at least two years old and payments have been made, and made on time. If the seller note is two years old but payments have been deferred and not made for some reason, then the note would not be eligible for SBA refinance.

Do existing seller notes be refinanced into my new loan?

If the seller has not placed a lien on the business then our lenders will typically allow the existing seller note(s) to stay in place. If the seller placed a lien on the business then the seller would need to subordinate to the lender, otherwise the lender will need to take that loan out and roll it into the new loan.

Can I refinance a conventional loan with a new SBA loan?

Yes but there are eligibility considerations. If the conventional loan was for an acquisition, the loan needs to be at least 12 months old and payments have to have been made, and made on time. The SBA also wants to see a logical reason for refinancing out of the conventional loan such as: If the conventional loan is structured with a balloon payment, is on a term less than 10 years, or has a higher interest rate than the SBA maximum rate (currently 6% for SBA 7(a) program). Generally, for non-balloon loans, the SBA requires a 10% payment savings on the new debt compared to the old.

Can I refinance a SBA loan with another SBA loan?

This is technically possible but not common. However, if your current SBA lender is declining a new loan that is needed and another SBA lender would be willing to do it, then that lender can submit to the SBA to see if the SBA will allow it. In all cases, it is the SBA that has to approve this.

Can I refinance a SBA loan with a conventional loan?

Yes, conventional lenders typically love to refinance SBA loans into conventional loans. As long as the loan is over 12 months old, but especially after two years, and the deal cash flows at the minimum ratios the conventional lender has, these are about the easiest conventional loans to get done.

What is the “guarantor carryover” requirement for SBA loans?

An important consideration with refinancing an existing loan with a SBA loan is the SBA guarantor carryover requirement. The SBA requires that any guarantors on the original note have to be carried over as guarantors on the new SBA loan. The SBA requires that any existing guarantors on the loan being refinanced to also have the same obligation on the new loan.

Conventional lenders have more flexibility and usually make this determination on the current strength of the borrower and strength of the new loan deal. As a general rule for most loans, a guarantor carry over from one loan to the other will be required.

Is there a “collateral carryover” requirement for refinancing?

Our conventional lenders do not require that personal property (like a house) that was pledged for collateral in the loan being refinaced be carried over into the new loan. An advisor may decide to refinance out of their existing SBA loan into a conventional loan if the SBA lender had to use their home for collateral.

The SBA however does require that the collateral carryover to the new loan. The exception allowed for this is when the current loan would be considered over-collateralized for what the SBA normally requires. The SBA also allows for comprable collateral to replace the originally pledged collateral.

How expensive is it to refinance my current loan with a new lender?

The cost to refinance can add up quickly when the costs to exit the current loan are added to the costs of a new loan. Most conventional lenders have a prepayment penalty that can range from 2% to 4%. For SBA loans there is no prepayment penalty. Then for the new loan there are conventional origination fees that can be from 1% to 2.5% and for a new SBA loan there is a guaranty fee (Uncle Sam’s origination fee) that equate to 2% to 2.7% of the loan amount.

When is refinancing an existing loan required for a new loan?

Lenders almost always require that they are in first lien position for your business. If you have a current business loan where the lender has a lien on the business, which they almost always do, then the new lender will require that the loan be subordinated to them or rolled into their new loan so that they will be in first lien position on the business. Generally, lenders don't like subordinating so these loans are almost always refinanced and added to the new loan.

What about personal debt that I used for business purposes?

Debt in the personal name of the advisor such as personal credit cards or a HELOC (Home Equity Line of Credit) that were used for business purposes can be a challenge for refinancing.

Personal Credit Card expenses that were used for business purposes would be allowed with credit card statements and receipts showing the business purpose expense. We have a hard time getting lenders to deal with small amounts for this since each needs documentation. But, if you used a personal credit card for larger expenses costing thousands, then this could be added along with a debt consolidation loan.

If you tapped into your HELOC to boot string your business or perhaps for a partial client acquisition, this can be refinaced if the interest deduction was reported on your latest tax return or Schedule C.

Can I refinance a loan I used to refinance previous loan?

If you need to refinance a loan whose sole purpose was to refinace a previous loan, then for our lenders, the current loan would need to show on the balance sheet and show the interest deduction on two full cycles of tax returns or Schedule Cs to be eligible to be refinaced.