Remember: Refinance is an SBA 504 Option

With SBA 504 rates dipping to new lows, your clients may benefit by locking in a fixed rate on existing commercial debt. Remember SBA 504 Debt Refinance is a permanent part of the program and pertains whether you have new or existing clients with qualified debt at least two years old. It is also eligible to take cash out to cover business operating expenses. See the requirements below…

  • Only existing commercial debt (no expansion costs) can be included in the 504 project
  • Qualified commercial debt must be at least 2 years old and used to acquire an eligible fixed asset
  • The loan or loans being refinanced must be current on payments for 1 year
  • Cannot refinance 504/7a/USDA/ or Third Party Lender Loans made with a 504
  • Refinance-only projects maximum loan-to-value is 90%
  • Cash-out refinance is permitted to cover most eligible business operating expenses
  • Business operating expenses include salaries, rent, utilities, inventory, or other business obligations incurred but not paid or will become due in next 18 months
  • When business operating expenses are included, the maximum loan-to-value is 85% and operating expenses cannot exceed 20% of value
  • Must meet all other eligibility requirements of SBA 504 program

SBA 504 will also allow some refinance within expansion projects. The business must be in operation for at least a year and existing debt up to 50% of the expansion costs can be included.

For more information on either SBA 504 Debt Refinance only or SBA 504 Refinance with expansion programs, contact FDDC at 605-882-5115.