With new enhancements for debt refinancing that recently went into effect, there’s never been a better time to refinance real estate. The U.S. Small Business Administration’s new rules super-charge the program in major ways – and now more businesses are eligible to refinance existing expensive commercial debt for SBA 504 and SBA 7(a) loans.
Not every SBA 7(a) loan or 504 loan will qualify. But these changes are opening many more opportunities, including for 7(a) borrowers who would like to take advantage of lower SBA 504 interest rates.
Available to refinance SBA 504 and 7(a) loans with lower fixed rates for the life of the loan. Some restrictions apply
Lower monthly payments, terms up to 25 years
Cash out: Up to 20% of appraised value of commercial real estate can be used for future operating expenses
No out-of-pocket: Ordinary closing costs and expenses may be refinanced
85% of the debt to be refinanced must originally have been used for commercial real estate purchase, construction or improvements
Debt must be at least 6 months old at the time of SBA application
Appraisal required, current within 12 months
Seedcopa works with your local lender, handling SBA interactions and documentation for the borrower and banker
SBA 504 Debt Refinancing With Expansion
If your commercial real estate or heavy duty equipment expansion project was looking to also refinance current fixed asset debt, the maximum amount of debt that may be refinanced within a 504 project is now 100% of expansion costs, increased from 50%.
Note: 85% of the debt to be refinanced must originally have been used for commercial real estate purchase, construction or improvements.
These permanent changes are truly beneficial to those businesses where commercial real estate or heavy duty equipment financing was put in place at higher interest rates. If you are looking for 100% debt refinance that does not include expansion, you may be eligible for SBA 504 debt refinance if your debt is at least 6 months old at the time of SBA application.
This is reduced from the previous requirement that the existing commercial debt be at least 2 years old. And you can refinance existing government guaranteed debt, including existing SBA 504 loans and 7(a) loans, that would not be able to be modified by the current lender.
Don’t forget: 85% of the debt to be refinanced must originally have been used for commercial real estate purchase, construction or improvements