Learn how you can reduce your monthly costs by using the SBA 504 refinance loan program.
- Do you have a balloon payment due on a commercial building that you own and occupy yourself?
- Do you want to enhance cash flow while decreasing your monthly payments?
- Do you require working capital?
If you indicated yes to any of these inquiries, a refinance under the SBA 504 Loan Program might be the best option for you. Through the SBA 504 loan program, qualifying business owners can refinance their current loan into an SBA 504 loan that is more advantageous.
Owners of businesses can potentially access cash locked up in equity and use it for operating costs and business expenses.
The SBA 504 Refinance Loan Program
An SBA 504 loan is a type of government-backed financing that can be used to pay off debt that was previously incurred for fixed asset and commercial real estate projects. There are three significant benefits to the SBA 504 loan program.
- Below market fixed interest rates
- 25-year amortization period
- Ability to access to equity
Benefits of the SBA 504 Refinance Loan
- Financing of up to 90% of the appraised value of the property
- Cash out up to 20% of the property's value for working capital requirements
- Use cash that was previously trapped in equity to pay employees, rent, utilities, inventory, or other responsibilities of the business
- Can combine various loans
- Use imputed value to satisfy equity injection requirements
Guidelines for SBA 504 Refinance Eligibility
- Property must be at least 51 percent owner-occupied
- Loan must be at least six months old
- Existing loans must have served at least 85% SBA 504-eligible purposes
- Existing SBA 504 or 7(a) loans may qualify for the loan if a federal agency guarantees it, but the original lender must be unwilling to change the terms
- To reach 90% LTV, more assets may be utilized as collateral
- Cash out for additional company costs is permitted up to 20% of the appraised worth
- Although not due at application time, an appraisal is necessary for financing