Refinance Your Standard Real Estate Loan via the SBA 504 Loan

Anyone who’s ever purchased property knows that it’s one of the bigger investments you’ll probably make. To lighten the financial load, is it possible to refinance the loan you took out to pay for it?

The answer is yes! The SBA 504 refinance program is a loan restructuring system that lets borrowers refinance existing debt at lower than market rates. This is accomplished by offering lower fixed rate solutions rather than the adjustable systems with higher rates common to traditional bank loans. This allows business owners to both save and have the necessary funds to grow their businesses. The SBA developed the refinancing program in support of its mission to spark growth in local communities. They realize that being able to consolidate and pay off existing debt at a lower fixed rate has a far-reaching impact, not just for the business owner but also for the local economy.

The SBA 504 refinance loan program can be used in several ways, including refinancing owner-occupied commercial real estate, (for example, an office, factory, or storefront), purchasing land and heavy machinery/equipment, and new construction and renovation projects.

What Are the Benefits?

If you need the funds to manage and maximize your cash flow, applying for a 504 loan to refinance commercial real estate is a sound business move. Consolidating your conventional commercial loans and refinancing them at below-market rates ensures lower payments and more freedom to achieve your business goals.


How does the SBA 504 refinancing program work?

The SBA 504 refinance program can be used in two ways.

One is a straight refinance of existing conventional commercial debt. Through this federally backed program, you can refinance up to 90% of the property’s appraised value. This means that the loan-to-value can be as much as 90% of value, even if you plan to consolidate multiple term loans.

The other option is a cash-out refinance. In this scenario, the business owner taps into existing equity to cover operating costs. Operating costs include staffing, inventory, and day-to-day operations. With a cash-out, the maximum loan-to-value is 85%, with up to 20% of the appraised value available to use as working capital.

How do I qualify for SBA 504 Refinancing

  • You must have a conventional loan that’s at least 2 years old and secured against your owner-user property. Existing SBA loans are not eligible.
  • Your original loan was used to either purchase or construct owner-occupied commercial real estate, develop land or buy major equipment considered SBA eligible at the time of its purchase.
  • Existing loan payments must be up to date for at least the last 12 months before submitting your 504 refinance application.
  • You must also be the main occupant of your building.

At 504 Capital Corporation, we’re experts when it comes to small business financing in Virginia, Maryland, and North Carolina. We can work with you to explain exactly how to purchase land with an SBA 504 loan as well as how to refinance your commercial real estate loan or purchase. As a 504 CDC lender, we provide long-term financing at competitive low interest rates to our clients so they can take their businesses to the next level. For more details, contact us on (757) 623-2691.

Comments

Post a Comment

Popular posts from this blog

FinTech Solutions for SBA 504 Small Business Financing

Image
S mall businesses often face challenges when it comes to securing financing for growth and expansion. Traditional financing methods can be cumbersome, time-consuming, and may not cater to the specific needs of these enterprises. In recent years, the landscape of small business financing has witnessed a transformative shift, thanks to the emergence of FinTech solutions. The Small Business Administration's (SBA) 504 loan program stands out as a crucial tool for businesses seeking to invest in commercial real estate. These loans, guaranteed by the SBA, provide a lifeline to enterprises looking to expand their physical presence. In this blog, we will explore the challenges associated with traditional financing, delve into the rise of FinTech in small business financing, and highlight how FinTech solutions are revolutionizing the SBA 504 financing landscape. Challenges in Traditional Financing Traditional financing methods often involve a complex web of paperwork, lengthy approval proc
Read more

Everything You Need To Know About Construction Loans

Image
Construction projects are exciting, but also often require a significant investment of time and money. Fortunately, there are financing options available that can help you bring your project to life. One such option is the SBA 504 Construction Loan , which offers a variety of benefits for qualified borrowers. In this article, we'll take a closer look at SBA 504 construction loans in Maryland , including how they work, who qualifies, and the benefits of choosing this type of financing for your construction project. What Is An SBA 504 Construction Loan? An SBA 504 Construction Loan is a type of loan that is specifically designed to help small business owners finance the construction or renovation of commercial properties. These loans are made in partnership with private lenders and the Small Business Administration (SBA). In general, SBA 504 loans are structured to allow borrowers to obtain up to 90% of the total project costs, which can be used for a wide range of expenses includi
Read more

5 Ways To Get A Small Business Loan

So, you want to start a business? You have an idea for the perfect venture and are ready to take the plunge and invest in your future. Ambition is certainly an important piece of the puzzle, but now you need to figure out what’s next. To be successful, most potential business owners will need to secure a small business loan to help them with things like start-up costs, construction, or mortgage payments. Small Business Loans in A Few Easy Steps Ready to get started? Here are 5 ways to get a small business loan. 1. Research the type of small business loan you need If you are a new small business you will need a different type of financing than an established company interested in having additional money available for expansion.   Start-up companies can benefit from Small Business Administration (SBA) loans that are more forgiving when it comes to qualifications. Loans like the SBA 504 and 7(a) loans require less money down and have attractive repayment terms, including low, fixed-intere
Read more