Refinancing Commercial Mortgage and Other Business Debt with an SBA 504 Loan
Small business owners can lighten their monthly debt payments and access equity trapped in commercial real estate holdings by refinancing conventional real estate loans with the Small Business Administration’s (SBA) permanent 504 Debt Refinancing Program.
Under the program available through Florida First Capital, small businesses can take advantage of below-market, long-term fixed interest rate refinancing for up to 90% of the appraised value of commercial real estate property without the requirement of expansion, which was required in the past. Eligible fixed assets include land, buildings, machinery and equipment that were acquired, constructed or improved by a small business for use in its business operations.
Borrowers may also refinance eligible business operating expenses (cash out), however a maximum 85% LTV applies and the business operating expenses portion of the project may not exceed 25% of the value of the eligible fixed asset(s) securing the qualified debt.
Eligible business operating expenses includes salaries, rent, utilities, inventory or other obligations of the business that were incurred but not paid prior to the date of the refinance application or that will become due for payment within 18 months after the date of application.
To qualify, at least 85% of the original loan must have been used to acquire, construct or improve fixed assets. The debt must have been incurred not less than two years prior to the date the refinance application is received by the SBA. Additionally, the loan to be refinanced must be current on all payments (no payment more than 30 days past due) during the last 12 months.
An independent appraisal of the fair market value of the project assets and any additional assets offered as additional collateral must be provided. Appraisals are not required at time of application, but are required prior to closing and must be dated no earlier than 1 year prior to the date the application was approved by the SBA.
Existing SBA 504 loans and other government guaranteed loans are not eligible.
Complete details here
For more information about the permanent SBA 504 Debt Refinancing Program in Florida, South Alabama or South Georgia, contact a Florida First Capital Loan Officer or email us at firstname.lastname@example.org. Phone: 850.681.3601 or toll-free at 888.320.5504.