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.


SBA 504 Refinance Program

An SBA 504 refinance loan can be tailored to a variety of needs. Business owners faced with high-interest mortgages or upcoming balloon payments can greatly benefit from this opportunity to ease their financial burden.  Additionally, those who took out loans prior to 2008 may find that changing requirements have made refinancing more challenging.  In particular, they may not easily find credit as readily available or terms as inviting. In this light, the SBA’s generous underwriting and the 504 refinance loan’s long terms look especially inviting.  Is a cash-out option necessary? Will switching from a variable to a fixed rate provide a more stable financial future? Is a balloon payment looming on the horizon?  We can help.

SBA 504 Refinance Loan Highlights

  • Multiple loans can be consolidated and/or refinanced
  • Up to 90% loan-to-value (first and second combined)
  • Cash out available up to 85%
  • FIXED for 20 or 25 years on 504 loan

How Does It Work?

A 504 refinance loan is set up in the same way as the standard 504: It offers low, fixed rates on loans with 20- or 25-year terms that are fully amortized.  A commercial bank provides a 1st mortgage loan and the SBA (through Growth Corp) provides a second mortgage up to 90%.  As the borrower, you will have to contribute at least 10% equity as a down payment, which is often covered by the equity from the property itself. If that’s not possible, cash or other assets can be used.

You can refinance up to 90% of the current appraised value of the property. If eligible business expenses are being refinanced along with property, the maximum proportion is 85%. Another option available is cashing out up to 25% of the property’s value. In other words, you may be able to use up to 20% of the building’s value for business expenses, such as operating costs, employee wages and inventory.

4 Quick Qualifiers

  • Is the loan at least 6 months 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 or improvement of fixed assets?
  • Has the business been current on the debt to be refinanced for the past 12 months?


Small businesses can refinance debt, reduce a line of credit or payables and obtain working capital using a 504 Refinance Loan


Example of how SBA 504 Refinance Loans Benefit Businesses

Ten years ago, Marie bought the property her business operates from for $800,000. At that time, she paid 25% and took out a $600,000 loan at 5.5% with a 20-year amortization. Her current payment is $4,127 monthly. However, after a decade of payments, she still owes $450,000. While her business has been successful, she is netting less cash than before due to increased labor and supply costs. Over the years, she has also had to borrow on various loans and credit cards to purchase business assets or meet cash flow needs. Marie now owes $100,000 on various lines and cards and her payments are approximately $2,000 monthly. Her debt now stands at:

  • +$450,000 mortgage loan
  • +$100,000 business debt
  • =$550,000 total debt with payments equaling $6,127

Her business property has appreciated and is now worth one million. The 504 Refinance allows cash out up to a quarter of the value of the building for business debt and even upcoming debt for the next 18 months (unpaid payables, payroll,etc). If she refinances, her debt would appear as below:

  • +$450,000 mortgage payoff
  • +$100,000 business debt
  • +$150,000 cash for business use
  • =$700,000 new SBA 504 refinance mortgage

Marie’s new payment for the SBA 504 Refinance of both loans will only be $4,157. She would save almost $2,000 monthly and receive $150,000 in cash to use for her business expenses – essentially free of payments.

How much could you save with the new 504 Refinance Program?  Call  (877) BEST 504 to schedule a consultation with one of our Loan Officers.

NOTE: Current SBA loans cannot be refinanced on this program. The debt must be non-government debt.


Debt Refinancing with SBA 504 – Quick Reference Guide


Growth Corp is an SBA Certified Lender and a high-volume loan provider, and has been assisting business owners for 30 years. Whether you are well-versed in business loans or are just learning about the possibility of extra help, contact a Growth Corp loan expert to find out more about 504 refinancing.