Refinance
Is an SBA 504 refinance right for your business? You can leverage the equity in your building to fund expansion, enjoy a fixed interest rate, and extend the repayment period!
- Terms – 10, 20, 25 years
- Loan Amounts – $25,000 up to $5.5 million for the SBA portion
- Down Payment – Minimum 10%
- Interest Rate – A fixed rate, typically below market, for the duration of the loan
Benefit for Borrowers
Financing available up to 90% of the appraised value of the property being refinanced at a long-term, fixed-rate
Equity contribution can be as little as 10% of the property being refinanced
Benefit for Lenders
Lenders benefit from the 1st lien position and low loan-to-value ratios
Fixed interested rate helps lenders compete for more business
Secures the borrower’s commitment for the long-term and releases any existing debt
Who can Qualify?
- Small businesses in the United States that are for-profit
- Tangible net worth less than $20 million
- Including affiliates, the net profit after taxes cannot exceed $6.5 million, based on a two-year average
- Company history of two years or more and debt of six months or more (for non-expansion projects only)
- At the time of application, the business must occupy a minimum of 51% of its property
Refinance Projects
With Expansion
- The amount of debt that can be refinanced could be equal to the full cost of the expansion
- The funds received from any note, regular, or SBA, must have been used for eligible fixed assets 85% of the time when it was first issued
Without Expansion
- Up to 20% of the appraised value can be taken out as extra equity by businesses to pay for other eligible business expenses
- A business can pay off an existing government-backed loan with an SBA 504 refinance loan
- For eligible fixed assets, at least 75% of the original proceeds must have been used
- The borrower should receive a significant benefit from the refinancing