New SBA lending rules highlight a persistent challenge for entrepreneurs: moving from fast, short-term financing to affordable, sustainable capital.

For decades, the small business capital conversation has centered on a familiar question: Do entrepreneurs have access to the financing they need? But access alone does not fully capture the challenge. For many small businesses, the more difficult question is whether the right capital is available at the right time, at a sustainable cost, and whether a business that turns to short-term financing has a viable path back to more affordable capital.

New lending rules from the U.S. Small Business Administration taking effect October 1 bring that challenge into sharper focus. Under SOP 50 10 8.1 , the SBA is changing how it treats certain sales-based repayment agreements, including merchant cash advances, by establishing conditions under which those obligations may eventually become eligible for SBA refinancing. The change is technical, but its implications are much broader. It highlights a persistent gap in small business finance: the path between the fast capital a business may need today and the affordable, sustainable financing it hopes to access tomorrow.

A New Path To SBA Refinancing

Merchant cash advances, commonly known as MCAs, are part of a broader alternative-finance market serving small businesses. The Consumer Financial Protection Bureau describes merchant cash advances as a form of sales-based financing in which a business receives an advance and repayment is generally tied to future revenue, such as a percentage of credit and debit card receipts or fixed withdrawals. For an owner facing an immediate cash need, their appeal can be relatively straightforward: speed and accessibility, particularly when conventional financing is unavailable or cannot move quickly enough.

Under the SBA’s updated rules, an active sales-based repayment agreement cannot simply be refinanced with an SBA-backed loan. The agreement must first be converted into a term loan, that loan must have amortized for at least 24 months, and the business cannot have entered into additional sales-based repayment agreements following the conversion. In other words, the new policy creates a pathway to SBA refinancing, but not an immediate one.

That distinction matters because it shifts the conversation from whether a business that has used alternative financing can ever reach SBA-backed capital to how it gets there. The two-year repayment requirement creates a potential bridge to more conventional financing, but it also raises an important question about the financing available to businesses during that transition.

Why Small Businesses Seek Alternative Capital

The Federal Reserve Banks’ 2026 Report on Employer Firms , based on the 2025 Small Business Credit Survey, helps put the issue into perspective. Thirty-eight percent of employer firms applied for a loan, line of credit or merchant cash advance during the previous 12 months, including 8% that applied specifically for an MCA. Among financing applicants, 37% sought less than $50,000, and only 42% received all of the financing they sought.

The reasons businesses seek capital are also revealing. Among firms that applied for financing, 56% sought funds to meet operating expenses and 46% sought capital to pursue an expansion or new opportunity. These are not necessarily long-term financial challenges; they can be immediate business needs requiring relatively modest amounts of capital.

The Federal Reserve Banks’ survey was fielded from September through November 2025 and included 6,525 employer firms with one to 499 employees across all 50 states and the District of Columbia. The Federal Reserve notes that the survey uses a nationwide convenience sample rather than a random sample, a limitation that should be considered when interpreting the results.

Speed Is Part Of Capital Access

Traditional conversations about access to capital often focus on whether a business can obtain financing. For small businesses, when that financing becomes available also matters. Capital approved after a business has lost an inventory opportunity, delayed an expansion or experienced a cash-flow shortage may no longer solve the problem that led the owner to seek financing.

This helps explain the increasing role of online and alternative lenders. Among firms applying for loans, lines of credit or cash advances, the share seeking financing from online fintech lenders increased from 17% in the Federal Reserve’s 2020 survey to 29% in its 2025 survey. Yet that convenience can carry trade-offs. The Federal Reserve Banks found that 60% of businesses that borrowed from online lenders reported that their actual borrowing costs were higher than expected, compared with 37% of small-bank borrowers and 32% of large-bank borrowers.

The challenge, then, is not simply making more capital available. Small businesses need financing that is affordable and appropriately structured, but they also need processes capable of responding to the pace and scale of their business needs. Speed is not separate from access to capital; for many small businesses, it is part of what determines whether capital is truly accessible.

Building A Path To Sustainable Financing

The SBA’s new refinancing provision highlights what remains a significant gap in the small business financing market. On one side are traditional bank loans, SBA-backed financing and lending from community-based financial institutions. On the other is a growing marketplace of alternative financing designed in part around accessibility and speed. The challenge is creating pathways that allow a business to move successfully from one to the other.

SOP 50 10 8.1 creates one potential bridge. But requiring a business to transition its sales-based obligation into a term loan and establish at least 24 months of amortization also illustrates how much can happen between accessing emergency capital and becoming eligible for more conventional financing.

This is where the small business capital conversation should continue to evolve. Banks, community development financial institutions, fintech companies and other lenders have an opportunity to consider financing structures that help viable businesses transition from short-term obligations toward sustainable longer-term debt. Advances in underwriting technology may also make it possible to evaluate smaller businesses more quickly while maintaining appropriate credit standards.

For decades, much of the small business capital conversation has focused on expanding access. That remains important, but the next phase should also examine what happens after capital is accessed. A stronger financing ecosystem is one in which businesses not only have more places to obtain capital, but also clearer pathways to move toward financing that is sustainable for their next stage of growth.

The SBA’s new rule creates one potential pathway between those parts of the market. The longer-term question is whether the small business finance system can develop more of them, giving businesses clearer opportunities to move from the capital they need today to financing they can sustainably use tomorrow.