SBA 504 Refinance Is Coming Back in 2016!

by John King on December 18, 2015

Update: June 2016:

The refi program is officially back.  Guidelines have been released with more to come shortly.  Here is what is known so far:

· Special Use or Single purpose buildings like hotels and assisted living facilities ARE eligible up to 90% LTV even though they would typically require more equity to get SBA financing as long as all the debt to be refinanced consists of secured long-term fixed assets.
· The business must be at least 2 years old.
· The debt to be refinanced must be at least 2 years old
· The loan to be refinanced must be current during the last 12 months
· Real estate, long life heavy equipment and machinery can be financed at 90% LTV
· Cash out for operating expenses including debt consolidation is limited to 75% loan to value.  (This hurts as the industry was hoping for 90% loan to value like the original version of the program offered, but this is understandable).
· Existing “government backed” loans are not eligible to be refinanced (i.e. the program cannot be used to refi an existing 504 loan, an SBA 7a loan or a USDA loan).
SBA will start accepting loan files from lenders on June 24.

Breaking News 12/18/2015 : Congress has just approved the return of the 504 Refinance Program

The 504 refi program had a very short, but successful life a few years ago and quite frankly not that many people in the SBA lending industry thought it would ever come back, but today it was written into law and it will be permanent.

This could be a HUGE deal for business owners needing to refinance their real estate, buildings and equipment.

It will likely be 4 to 6 months before the program is rolled out and we won’t know exactly what the rules will be, but hopefully they will be similar to what they were the last go round.

This post as well as our web page located here will be updated as information becomes available.

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