Refinance Now With 504 Loans

November 15, 2015

Under the Small Business Jobs Act, SBA has implemented a temporary program which allows small businesses to refinance eligible fixed assets with the 504 program.  This will provide small businesses the opportunity to lock in long-term, fixed rate financing as well as protect jobs and preserve working capital.

Key Elements:

  • SBA will begin accepting 504 refinance applications beginning February 28, 2011 through September 27, 2012.
  • Initially, the refinancing will apply only to loans maturing on or before December 31, 2012.(SBA will later revisit this requirement and may open the program to businesses with later balloon payments.)
  • Substantially (85% or more) the proceeds of the loan being refinanced must have been used for 504 eligible purposes. All of the proceeds must have been used for the benefit of the small business concern.
  • The refinance 504 loan is structured like SBA’s traditional 504 loan with the 50/40/10 structure.
  • Loans being refinanced must have been current for the past year with no payment being deferred or past due for more than 30 days. Transcript must be provided to demonstrate compliance with this requirement.
    • Debt must have been incurred not less than two (2) years prior to the date of the application is received by SBA.
    • The small business concern must have been in business for two (2) years prior to the submission of the application.
    • If refinancing the same bank institution debt, the transcript of account for the entire period of the loan must be provided.
  • A new, independent appraisal will be required for all projects and must be completed within six (6) months of the date of application. Fair Market Value of the assets being financed will determine project cost(s).
  • The Third Party Loan and the 504 loan combined may not be more than 90% of the fair market value of the fixed assets securing the loan.
  • Funding of the 504 refinance loan must take place within six (6) months from date of approval.Loans will be cancelled if not funded during this period.

What Is Not Eligible?

  • No refinancing of loans which are already part of an existing 504 project.
  • No refinancing of loans with existing federal guaranty (7(a), USDA, or New Market Ventures Capital Companies (NMVCC).
  • No refinancing where the creditor on the debt to be refinanced is in a position to sustain a loss causing a shift to SBA of all or a portion of a potential loss from an existing debt.

NOTE:  RMI is eligible to submit 504 refinance packages through the ASM method to assist in expediting the processing and approval of the 504 loan.

Please call RMI for further information or to prequalify your 504 refinance project.