Small businesses are the backbone of the American economy. However, these businesses face many challenges, including obtaining financing to grow their businesses. The SBA 7(a) loan program has been a popular option for small businesses seeking financing, but rising interest rates can make managing debt service payments challenging. Refinancing to an SBA 504 loan can provide a stable solution for businesses facing rising interest rates.
Why Refinancing from SBA 7a to SBA 504 is a Great Idea
Are you a business owner worried about rising interest rates? As interest rates continue to rise, many business owners are looking for a stable solution to refinance their commercial real estate and heavy equipment loans. Refinancing from SBA 7(a) to SBA 504 is a great option to consider, as it provides a fixed-rate solution that can help you access cash trapped in equity.
Why Refinance from SBA 7(a) to SBA 504?
There are several reasons why business owners choose to refinance from SBA 7(a) to SBA 504. First and foremost, the 25-year loan term comes with a fixed, below-market interest rate, providing stability and predictability to your monthly payments. With up to 90% financing available, you can access the cash you need for other business expenses without putting additional strain on your finances.
Another benefit of refinancing from SBA 7(a) to SBA 504 is that we only move forward with refinancing if it saves you at least 10% each month. This ensures that you are getting a better deal and saving money in the long run. Additionally, the loan can include SBA prepay, assuming sufficient equity, providing you with more flexibility and control over your finances.
Eligibility Guidelines for SBA 504 Refinance
To be eligible for SBA 504 refinance, almost any owner-occupied property will qualify, as long as it meets all other SBA 504 eligibility guidelines at the time of application. The existing loan must be at least six months old, and at least 85% of the existing loan must have been for SBA 504-eligible purposes. The loan may be subject to a federal agency guarantee, and up to 20% of the appraised value can be used for cash out for other business expenses (not exceeding 85% combined LTV).
How to Get Started with SBA 504 Refinance
Getting started with SBA 504 refinance is easy and streamlined. Simply gather a few essential documents for the existing mortgage(s), including the promissory note on the loan(s) to be refinanced, the current loan statement for the loan(s) to be refinanced, and the final closing statement for the original purchase. If the existing mortgage to be refinanced is an SBA 7(a) loan, please provide the SBA Authorization, including any modifications/amendments.
Conclusion
If you're a business owner looking for stability and predictability in your monthly payments amid rising interest rates, refinancing from SBA 7(a) to SBA 504 is a great option to consider. With fixed-rate solutions and the ability to access cash trapped in equity, SBA 504 refinance can help you achieve your financial goals. Remember to gather the necessary documents and ensure your property meets the eligibility guidelines before applying. Start your journey towards financial stability today.