SBA rules
The answer changed on October 1, 2026. Here is the current SBA rule word for word, what it means for an active advance, and the faster route for smaller balances.
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Short answer: not while the advance is active. Under SBA SOP 50 10 8.1, Appendix 14 (7(a) Debt Refinancing Requirements), an SBA 7(a) loan can refinance a merchant cash advance only if the advance was converted to a term loan, has amortized for at least 24 months, and no additional advances have been taken since the conversion. An active MCA is not eligible, and factoring agreements are not eligible at all.
Published . Source: SOP 50 10 8.1, effective October 1, 2026, per SBA Information Notice 5000-880695. Facts verified October 15, 2026.
From SOP 50 10 8.1, Appendix 14, General Requirements:
"Sales-Based Repayment Agreements (e.g.; Merchant Cash Advances) are only eligible for refinancing if the original agreement has been converted to a term loan, has amortized for at least 24 months, and no additional Agreements have been implemented since the conversion of the prior agreement(s). If the Sales-Based Repayment Agreement is still active, it is not eligible for refinancing."
The same list states: "Factoring agreements are not eligible for refinancing." The SOP’s definitions describe a Sales-Based Repayment Agreement as "A business funding agreement where a business receives a cash advance in exchange for a percentage of its future sales," naming point-of-sale and merchant cash advances as examples.
| Condition | What it means | Typical MCA today |
|---|---|---|
| Converted to a term loan | The original advance has been restructured into a loan with a set amortization | Usually still a purchase of future receivables |
| Amortized for at least 24 months | Payments on the converted loan have run for two years | Most advances run months, not years |
| No additional agreements since | No new advance taken after the conversion | Renewals and second positions are common |
| Still active? | If yes, not eligible | Not eligible |
All three conditions have to be true at once. In practice, that means an SBA loan cannot be the tool for getting out of an advance you are paying today.
The rule has moved. SOP 50 10 8, effective June 1, 2025, said flatly: "Merchant cash advances and factoring agreements are not eligible for refinancing." SOP 50 10 8.1 replaced it for applications issued an SBA loan number on or after October 1, 2026, and opened the narrow converted-and-seasoned path quoted above. Pages written before or between those changes can disagree, so check the date and the SOP version behind any answer.
Even eligible debt has to pass Appendix 14’s other tests. One that matters for MCA owners is the ten percent improvement rule: "When refinancing debt, the new installment payment amount must be at least 10 percent less than the existing installment amount(s) in aggregate." The lender also has to document why the refinancing makes sense and confirm the debt appears on the business’s books. Ask the SBA lender to walk through each item before you apply.
An SBA loan is not the route for an active advance, but there are others. Merchant Fund Express publishes that it can buy out an existing position with a balance of $100,000 or less, moving it from daily debits into a weekly-payment term loan or a line of credit; see MCA refinance. Merchant Fund Express publishes its business term loan at $10K–$250K, with the loan amount capped at 15% of annual revenue and terms of 12 to 18 months, and its business line of credit at $10K to $350K, from 1% per month with a 2.49% fee per draw.
Whether a later SBA loan could refinance that new term loan is a question for the SBA lender under Appendix 14, not something we decide. If the SBA path is your long-term goal, tell the SBA lender about every position now and keep the conditions above in view. To see what the payoff of a current advance looks like, use the MCA payoff calculator.
No. Under SBA SOP 50 10 8.1, Appendix 14, an active Sales-Based Repayment Agreement such as an MCA is not eligible for refinancing.
Only if the advance was converted to a term loan, has amortized for at least 24 months, and no additional agreements have been taken since the conversion.
SOP 50 10 8.1 took effect October 1, 2026, for applications issued an SBA loan number on or after that date.
No. SOP 50 10 8.1, Appendix 14, says factoring agreements are not eligible for refinancing.
Merchant Fund Express publishes buyouts of an existing position with a balance of $100,000 or less into a weekly-payment term loan or a line of credit.
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