Interested in the SBA 504 Refinance Program, but not sure where to begin?

Here are a few questions to ask yourself to get started:

  1. Has the debt been outstanding for at least 2 years?
  2. Has the business been in operation for at least 2 years?
  3. Is the borrower current (NO past due payments greater than 30 days or deferral payments) on the note for the past 12 months? A transcript will be required to demonstrate compliance.
  4. Was the debt used mainly (>85%) for eligible 504 purposes (i.e. >51% owner-occupied commercial real estate, heavy machinery, equipment, and closing costs related to the project)?

Additional Program Rule details:

  • No Cash-Out Provision (at this time)
  • Maximum LTV is 90%. Additional collateral (real estate and/or equipment) can be pledged to supplement project collateral shortfalls.
  • The total financing amount cannot exceed 90% of the FMV of the fixed assets securing the loan OR the outstanding principal balance of the refinanced debt, whichever is lower.
  • An appraisal of all collateral, dated within 6 months of the application date, must be submitted to the SBA with the application.
  • NO refinancing of existing SBA 504 projects, SBA 7(a) loans or USDA loans.
  • NO refinancing where the creditor on the debt is in a position to sustain an involuntary loss

Please note: this program is for refinancing ONLY. No expansions or purchase of real estate or other fixed assets