Blog Archive

Monday, June 29, 2009

SBA 504: Refinance Now Possible

Effective immediately, the SBA 504 program can be used in certain situations to refinance existing debt. The key eligibility requirements are summarized below:

  1. The 504 project must include an expansion component. This means that we can’t look at refinancing an existing loan unless the project also includes the acquisition, construction or improvement of land, building or equipment by the small business.
  2. The existing debt is collateralized by fixed assets and must also collateralize the SBA 504 loan.
  3. The amount of debt to be refinanced may not exceed 50% of the project cost of the expansion. The amount of the loan(s) to be refinanced would be added to the total project and then we would structure the deal with the normal 50/40/10 split between bank/SBGC/borrower. The equity requirement would be higher for new businesses or special-use properties.
  4. The refinancing will provide a substantial benefit to the borrower when prepayment penalties, financing fees and other financing costs are accounted for. The SBA will require a 10% reduction in the monthly installment in order to qualify.
  5. The 504 financing must provide better terms or interest rate than the existing debt.
  6. The borrower must be current on all payments due on the existing debt for not less than one year preceding the date of refinancing.

This is a permanent change to the 504 program and was included as part of the American Recovery and Reinvestment Act of 2009 to promote economic recovery.

For more information about the 504 program and other business financing programs give us a call at 863-298-8900. For detailed information or a specific quote on a loan scenario, give us a call at: 863-298-8900 or 813-833-3132 Or to fill-out a quick loan scenario Pre-Qualification form visit:

No comments: