504 REFINANCE PROGRAM
504 REFINANCE PROGRAM
What is it?
Demand for the return of the 504 Debt Refinance Program has been high due to its initial overwhelming success before it expired in 2012. Now it’s back, and the timing couldn’t be better! The 504 Refinance Program helps strengthen banks by reducing their lending exposure, while also providing a lifeline to businesses with balloon payments coming due.
With the re-launch of the 504 Refinance Program, small business owners can use the long-term, fixed rate 504 Loan Program to refinance existing commercial mortgages. This is huge considering the current trends are pointing toward tighter credit standards and higher interest rates.
At a time when it’s becoming increasingly difficult to refinance commercial loans, the 504 Refinance Program is here to fill the gap by providing an affordable refinancing product that both lenders and the small business community can eagerly embrace!
- The borrower’s equity in the collateral often fulfills the down payment requirement
- Low, fixed interest rate on the 504 portion
- Long loan term
- Ability to access cash in the building
- Consolidates multiple loans
- Payment stability
- Improved cash flow
- Protection from balloon payments
If you answer “yes” to the following questions, the project will likely qualify for the 504 Refinance Program.
- Is the loan at least two years old?
- Is the property being refinanced at least 51% owner-occupied or long-term equipment?
- Was the debt to be refinanced originally used for the purchase/improvement of fixed assets?
- Has the business been current on the debt to be refinanced for the past 12 months?
3 Keys to the Refinance Program
- 90% Advance Rate – No Cash Out
- 85% Advance Rate – Cash Out
- Credit Quality – minimum 12 month history of no late (30+) payments
Is the refinance program permanent?
What businesses qualify?
Is cash-out refinance available?
What kind of interest rate can I expect?
What is eligible for cash-out?
- To reduce lines of credit
- To pay down business credit cards
- Other obligations of the business that were incurred, but not paid, prior to the date of application or that will become due for payment withing 18 months after the date of application
What debt qualifies for a 504 refinance?
- Mortages that are at least 2 years old
- Debt that was originally used for the purchase or improvement of fixed assets
- Debt with current payment histories (at least 12 months)
- Debt that is NOT a government guaranteed loan (7a, USDA, 504)
Loan Structure Scenarios
SBA 504 LOANS
How Will You Grow Your Business?