If your small business has a commercial building and looking for a low rate refinance, the SBA has a great solution.
SBA offers refinance of owner/user real estate and heavy equipment loans through the SBA’s 504 program.
The SBA 504 loan program provides funding for small businesses to cover costs associated with fixed assets, usually Real Estate. For businesses that qualify, this government-guaranteed program provides up to $5 million loans.
INELIGIBLE USE OF FUNDS
• Cannot be used for working capital, inventory, or intangibles
• No start-up businesses can qualify
• Up to 90% loan to value
• Low fixed rate on SBA portion of the loan
• Cash out for business operating expenses
Loans eligible for refinance
The refinance must include at least one loan that meets the following criteria (referred to as the Qualified Debt):
• A commercial loan that was primarily used for, and is secured by, owner-occupied (51%+) commercial real estate and/or heavy equipment with a useful life of at least 10 years. Up to 15% of the proceeds of this loan may have been for other business purposes.
• The loan was incurred at least 2 years prior to application date, and has been secured by the fixed asset collateral for at least 2 years.
• Loan proceeds benefitted the operating company that is applying for the loan, and that entity has not changed ownership in the 2 years prior to application.
• There have been no payments over 30 days late in the 12 months preceding application.
• Federally guaranteed debt (SBA or USDA) and existing 504 first mortgages are NOT eligible to be refinanced
Additional loans that are secured by the same collateral as the Qualified Debt may be included in the refinance package if they have been secured by this collateral for at least 2 years, and there have been no payments over 30 days late in the 12 months preceding application.
If the refinance request only includes debt(s) that meet the above criteria, the loan to value maximum is 90%.