SBA seeks to increase financing to “small businesses” and not individuals. This line becomes blurry when small business owners are seeking to refinance loans held in their personal name. While, in many cases, there was a legitimate reason to have the loan be made in the personal name (instead of the business name), it can be very difficult to receive approval from SBA in this situation.
The refinancing of credit card debt issued in the personal name is usually the messiest. The reason that the hurdle is placed so high is that it would otherwise be too easy to have the SBA be taken advantage of by people refinancing debt used for personal expenses under the 7a program. As it currently stands, if an individual took out a personal loan (i.e. the Note is in the name of the individual), and the proceeds of the loan were used for business purposes (would need to be certified to), and the debt has been reported on the business Balance Sheets, and the interest on the debt has been reported on the business Income Statements (i.e. FTRs), it can be eligible for SBA refinancing. If, in this situation, the lender on the Note to be refinanced is willing to modify the Note to reflect the business as the borrower, the debt can be refinanced (and it is not an exception to policy). However, if the lender is not willing to modify the existing Note, it cannot be refinanced without first getting it approved as a policy exception by the folks in DC.
So, if you cannot prove all of these requirements in the application to SBA, an application to refinance credit cards issued in the personal name will not be approved. This is one of the most difficult issues surrounding the refinancing of debt with SBA.
Loans made in the business name are much more conventional in their documentation requirements for SBA.