The Ultimate Guide to Refinancing Your Main Street Loan
This guide walks you through everything you need to know to successfully refinance your Main Street loan with confidence before your balloon payment hits.
What Was the Federal Reserve Main Street Lending Program?
In 2020, the Federal Reserve launched the Main Street Lending Program (MSLP) under the CARES Act to support small and medium-sized enterprises (SMEs). The program provided 5-year loans with deferred principal and interest during the first years, designed to bridge uncertainty during the pandemic.
But the structure came with major challenges:
- Years 1 – 2: Interest (and principal in year 1) deferred
- Year 3: 15% principal due
- Year 4: 15% principal due
- Year 5: 70% balloon due at maturity
Unlike PPP loans, Main Street loans were not forgivable. Which means many SMEs are now facing massive balloon payments in 2025–2026.
👉 Read the Federal Reserve’s Main Street Lending Program Overview
Why Refinancing Matters Now
Delaying action on your balloon payment until Q4 2025 may lead to avoidable financial strain, particularly with lenders expected to handle a surge of similar requests. Companies that prepare in advance will secure more choices and greater leverage when it comes to refinancing.
Avoid Default Risk:
A 70% lump-sum balloon is not feasible for most SMEs.
Create Predictable Payments:
SBA loans replace uncertainty with fully amortized schedules.
Extend Terms:
SBA 7(a) and 504 loans offer 10–25 years of repayment.
Unlock Stability:
Free cash flow from “balloon risk” so it can be reinvested in operations.
⬇️ Keep reading below for your Loan Refinance Checklist.
✅ The Main Street Loan Refinance Checklist
Preparing early for a balloon payment or refinance can make the process far less stressful and much more cost-effective. Use this checklist to ensure your business is ready, organized, and positioned to negotiate the best possible terms.
To succeed, preparation is key. Lenders and SBA underwriters will expect:
1. Financial Documentation
- Last 2 years of business tax returns
- Current YTD financial statements (P&L and balance sheet)
- Debt schedule showing your Main Street loan and other obligations
👉 Tip: Ensure the Main Street loan is recorded properly on the company’s balance sheet, not buried in personal accounts.
2. Cash Flow Analysis
Lenders will calculate your Debt Service Coverage Ratio (DSCR). They want to see that operating income can support the new debt service.
- One-time expense add-backs
- Demonstrated cost reductions
- New or recurring revenue contracts
- Explanations of seasonality trends
👉 Tip: Financials aren’t clay, but they aren’t stone either. You can strengthen DSCR with:
3. Eligibility Confirmation
- Only business debt is eligible.
- The original loan proceeds must have been used for eligible purposes (working capital, equipment, real estate, etc.).
4. Collateral & Guarantees
- SBA requires collateral if available.
- Owners of 20%+ must personally guarantee.
Tips to Strengthen Your Main Street Refinance Application
A strong refinance application can set your business apart in a crowded lending environment. These tips will help you highlight your financial stability and improve your chances of securing favorable terms
- Prepare early: Begin the process at least 90–120 days before maturity.
- Tell the story: Explain improvements since the loan originated.
- Highlight resilience: Demonstrate how the business is stronger today than in 2020.
- Work with SBA specialists: Experienced lenders know how to properly structure add-backs and mitigants.
Meet with a refinance expert today.
Every day you wait, your options get worse. Interest rates could rise and approval criteria could tighten. Start today to avoid your balloon payment and refinance your Main Street loan.
Action Plan for Small Businesses with Main Street Loans
- List your current debts (balances, maturities, rates).
- Gather your financials (tax returns, interim P&L, balance sheet).
- Run refinance scenarios to see SBA amortized payment schedules.
- Engage an SBA lender experienced in Main Street refinances.
- Apply early—don’t wait until the balloon is 30 days away.
🔗 Additional Resources
Federal Reserve – Main Street Lending Program Overview
SBA 7(a) Loan Program Details
SBA 504 Loan Program Details
Final Thoughts
The Federal Reserve’s Main Street Lending Program gave SMEs a lifeline during crisis. But the structure created a balloon payment cliff that now threatens many businesses.
Refinancing into an SBA 7(a) or 504 loan offers something the Main Street program never could: stability, predictability, and peace of mind.
👉 If you’re facing a looming balloon, now is the time to act. Contact us here or connect with Javier Jorge on his website javierthebanker.com or on LinkedIn to explore your options.
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Contact our experts to learn more about refinancing your Main Street Loan.