Commercial Mortgage Refinance Now Available Through SBA
Business owners who occupy 51% or more of their commercial property are now eligible to refinance their commercial loans that are coming due with 90% financing through the SBA.
This is a temporary program available for approx 1.5 years (through Sept 2012) primarily designed to help profitable businesses who may no longer have enough equity to get conventional financing.
The first phase of the program will only be available to business owners whose loan is coming due prior to December 31, 2012, but the program is expected to be expanded in the coming months.
SBA Refinance Benefits:
- Available up to 90% loan to value
- No balloons or calls
- Long term amortizations of 20 to 25 years
- Low risk to lender because of Govt Guarantee
- Below market fixed rates*
SBA Program, But Not Just for Small Businesses
Because of recent legislation, the SBA commercial mortgage refinance programs are open to mid-sized businesses and can now accommodate larger loans for larger businesses.
Loans can now be in excess of $12 million and businesses are now eligible as long as they have a tangible net worth of less than $15 million and after tax income of less than $5 million.
Not For Every Business
The SBA 504 refinance program has some caveats to it, but if you can meet them (and many will be able to) then you should consider it.
Cash Out for Business Debt Consolidation
The SBA also intends to open the program up to businesses who have balloons coming due after 12/31/2012 or to those who stand to benefit substantially from a refinance…AND they will likely allow some cash out to pay business debt, but those adjustments to the program likely won’t happen for a few months.
As an alternative, the SBA 7a program allows loans of up to $5 million and is available now for business debt consolidation as long as you can prove the debts are business-related.
* The SBA 504 program consists of a first and second mortgage and the second mortgage is a below market 20 year fixed rate.