The SBA has released the program requirements allowing for the refinancing of existing debt utilizing the 504 loan program enacted as part of the Small Business Jobs Act on September 27, 2010.
Below is a brief summary of the regulations released on February 16, 2011. SBA started processing applications on February 28, 2011.
Note: Funding is limited to $7.5 billion per fiscal year. Act now while funding is available!
Eligibility Criteria
- Loan payments current for previous 12 months
- Loan must be at least 2 years old
- 85% of proceeds being refinanced must be 504 eligible
- Cannot refinance 7(a) or 504 loans
- Up to 90% loan to value (up to 125% with additional collateral)
- Third party loan must be 50% of fair market value
- 504 loan cannot exceed 40% of fair market value
- Appraisal must be less than 6 months old
- Debenture must fund within 6 months of SBA approval
Sample Projects
Under Collateralized with additional fixed assets.
| Property Value: |
$600,000 |
| Additional Fixed Assets: |
$300,000 |
| Total Collateral Available: |
$900,000 |
| Debt to be Refinanced: |
$800,000 |
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| Lender Loan: |
$450,000 (50% of appraisal of all eligible fixed assets) |
| 504 Loan: |
$350,000 (38.9% - pays off remaining balance) |
| Borrower Equity: |
$100,000 |
Refinancing/Leveraging Property
| Property Value: |
$540,000 |
| Existing Debt: |
$500,000 (92.5% LTV) |
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| Lender Loan: |
$270,000 (50% of appraised value) |
| 504 Loan: |
$216,000 (40% of appraised value) |
| Borrower - Additional Cash: |
$14,000 |
| Borrower Equity: |
$40,000 |
Contact one of our experienced representatives today to see if your project qualifies.
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