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SBA 504 Loan Refinance

In December 2015, Congress approved a permanent SBA 504 debt refinance program.

This is a really good thing. It brings back a temporary program from 2011 and 2012 that allowed small business owners to refinance their high-interest debt and take advantage of benefits offered only by SBA 504 loans: lower down payments, longer terms, and lower fixed monthly payments than ordinary commercial real estate loans.

Here are some of the key aspects of the program as we currently know them:

  • The commercial loan(s) to be refinanced must be at least two years old. It can be more than one loan as long as they are secured to the same eligible fixed asset.
  • The loan(s) must be current on all payments due in the previous 12 months and evidence of this must be presented.
  • The business must be operating for at least 2 years with no ownership changes.
  • All SBA 504 program eligibility requirements, including 51% owner-occupancy requirement, must be met.
  • For refinance-only projects, the maximum loan-to-value is 90%. Cash-out for eligible working capital has lower loan-to-value limits.
  • Cash-out refinancing to cover eligible business operating expenses is permitted, but there are certain restrictions.
  • Existing SBA and USDA loans are not eligible to be refinanced under this program.

The comment period for this law is still open, meaning that some of the particulars may change between now and when we’re able to start processing these loans. There are also many nuances with this new program that we’ll be more than happy to discuss with you. Give us a call at 866-622-4504 or fill out our contact form, and we’ll be in touch. Real soon. Promise.