Refinancing

Expansion Refinancing

• Recovery Act Legislation allows 504 program projects to include a limited amount of debt refinancing if there is a business expansion and the debt refinanced does not exceed 50% of the projected cost of the expansion. “Expansion” includes any project that involves the acquisition, construction or improvement of land, building or equipment for use by the business. The following are some of the conditions under which borrowers will be eligible for refinancing:

  • The debt being refinanced was incurred to acquire land, to construct a building or to purchase equipment. The assets acquired must be eligible for financing under the SBA 504 program.
  • The existing debt is collateralized by fixed assets.
  • The existing debt was incurred for the benefit of the business.
  • The new financing provides a substantial benefit to the borrower when prepayment penalties, financing fees, and other financing costs are taken into account.
  • The borrower has been current on all payments of existing debt for one year prior to the date of refinancing.
  • For more information on the 504 loan program and eligibility requirements, visit www.recovery.gov or www.sba.gov/recovery.

Existing Debt

SBA is finalizing the rules; please check back periodically.

• The loan to be refinanced must have been used to finance SBA 504 eligible assets.
• Debt to be refinanced must have occurred at least 2 years prior to refinancing.
• Your business must have been operating for the entire 2-year period.
• Loan payments must be current for at least the 12 months immediately prior to the application date.
• Commercial real estate must at least 51% owner occupied.
• The maximum Loan-to-Value will be 90%, but could go higher with additional collateral.
• Federally guaranteed loans are NOT eligible for refinancing, i.e. current 7(a), 504, USDA or HUD.
• 504 refinancing will be available for 2 years.