How do I refinance business debt?

Why businesses refinance — and when it makes sense

The most common driver is cost: a merchant cash advance carrying an effective APR of 60–150% is the obvious refinance candidate — run your current MCA's real cost through the factor rate to APR calculator first. But refinancing also makes sense when you're simplifying multiple monthly payments into one, extending terms to improve monthly cash flow, removing a personal guarantee on an older loan, or locking in a fixed rate before a rate cycle turns upward. The Federal Reserve H.15 release tracks prime and benchmark rates — rising prime rates accelerate the urgency for locking long-term fixed-rate SBA pricing.

Path 1 — SBA 7(a) refinance (cheapest long-term option — non-MCA debt only)

The SBA 7(a) program authorizes loan proceeds to refinance existing business debt — bank term loans, equipment notes, other conventional business debt — provided the refinance 'provides a clear benefit' (lower rate, longer term, or improved terms). As of SOP 50 10 8 (effective June 2025), the SBA explicitly excludes merchant cash advances and factoring agreements from 7(a) refinance eligibility, so this path does not cover MCA debt. Maximum loan amount $5 million; terms up to 10 years for working capital, 25 years for real estate collateral. Current SBA 7(a) rates are capped at prime + 3.0%–6.5% depending on loan size — smaller loans carry the higher cap (per sba.gov's 7(a) terms table). Qualification floor: 680+ FICO, 2+ years in business, $250K+ annual revenue, and ability to document the existing debt that's being refinanced. Payoff letter from the current lender required at closing.

Path 2 — Bank-tier term loan refinance

Conventional banks offer term loans at 7–12% APR for established businesses with strong credit. Qualification is more demanding — typically 700+ FICO, 3+ years in business, full financial statements, and collateral — but rates are at the lower end of the market. Banks rarely refinance standalone MCAs without additional collateral or a relationship account. Best for businesses with real estate or equipment to pledge.

If this fits your situation, apply with ClearValue Lending — your file routes to the funding partners best matched to it.

Path 3 — Debt consolidation loan

A business debt consolidation loan is a single new term loan used to pay off multiple existing obligations simultaneously. Online and specialty lenders offer consolidation starting at 650 FICO with 1+ year of operating history. Rates range 18–40% APR — higher than SBA but far below stacked MCAs. Lenders underwriting consolidation requests require a full debt schedule: list every outstanding obligation, its monthly payment, current balance, and lender name. Debt-service-coverage ratio (DSCR) after consolidation must typically exceed 1.25x — run the post-consolidation numbers through the DSCR calculator before submitting the debt schedule.

Path 4 — When bankruptcy is the right call instead

If your total outstanding debt exceeds 3–4x annual gross revenue AND your MCA(s) include confessions of judgment (COJ) clauses already triggered, refinancing may not be viable before a lender freezes your accounts. Chapter 11 business reorganization halts collections, allows restructuring of all business debts, and can be more cost-effective than stacking additional refinance debt. This is a legal decision — consult a bankruptcy attorney before assuming refinance is the only path. The FTC has taken action against MCA providers using deceptive COJ and collection tactics.

Apply at ClearValue Lending

Start at small business financing to compare products, or apply directly at Find my match — your file routes to the funding partners best matched to your credit profile, current debt stack, and refinance goal. ClearValue Lending is a funding platform, not a lender or financial advisor.