Have a loan with a balloon payment coming due and/or with a variable interest rate?
The SBA 504 loan program permits refinancing an existing loan in place when, at minimum, 85% of the original loan proceeds were used to finance fixed assets. The SBA 504 Refinance loan is afforded the same great perks as the regular 504 program – the 10, 20, or 25 year loan term and a low, fixed interest rate, which is set at the time the 504 loan funds.
Full details on the SBA 504 Refinance program are as follows:
- Original debt incurred not less than 6 months prior to SBA application
- 85% or more of the original use of proceeds of the debt to be refinanced was for commercial real estate, equipment, or other long-term fixed assets
- Original debt incurred for the benefit of the small business
- Small business has been in operation for at least two years
- Business occupies at least 51% of commercial real estate
- Review of payments for past 12 months to determine credit worthiness
- Federally guaranteed debt can be refinanced subject to specific conditions (lender letter and substantial benefit of 10%)
- May consist of one or more commercial loans to be refinanced
- Loan to value of 504 loan and Lender loan at 90% if straight debt refinance
- Loan to value of 504 loan and Lender loan at 85% if debt refinance with cash out for Eligible Business Expenses
- Eligible Business Expenses (EBE) – business operating expenses incurred but not paid at SBA application date or that will become due within 18 months (include salaries, rent, utilities, inventory and other business expenses that are not capital expenditures) – totaling not more than 20% loan to value
Please contact us at 605-882-5115 to discuss further.