Refinance

Advantages of Refinance Program:

  

Examples of How it Can Work for You

· Cash Out” available for eligible business expenses up to 90% of appraised value

· Allows Banks to consolidate multiple term loans and LOC’s into new note with a low, 20-year fixed rate 

· Bank participation based upon amount being financed (only an amount greater than or equal to the 504 loan amount)

· Existing debt does not have to qualify as 504 eligible. Only original debt must have qualified as at least 85% 504 eligible at the time of inception

· 51% Occupancy requirements must be met at date of application (not original loan date)

 

SBA 504 Refinance Eligibility

 

· Existing loan must have been current for the previous 12 months (no more than 30-days late)

· Loan must be at least 2 years old

· SBA Loan must fund within 6 months

Documentation Requirements

Eligible Business Expenses can now be included in project financing.  Expenses must be incurred, but not paid prior to the date of application or will become due within 18 months of the date of the application.  Ex:  Rent/Leases, Utilities, Inventory, Payroll, Other Working Capital

 

  

Scenario:

  
Appraised Value
$1,400,000             
Outstanding Debt
$1,000,000
90% of Appraisal
$1,260,000

Maximum Working Capital -

“Cash Out”
50% Lender Participation:
$   700,000                                   
SBA 504 Loan:*
$   560,000
Equity in Property:
$   140,000
 *$260,000 of $560,000 504 loan is available for  W/C (“Cash Out”)

 

Maximizing the Debenture -

“No Cash Out”
Lender Participation:
$   500,000                                    
SBA 504 Loan:*
$   500,000
Equity in Property:
$   400,000
*Lender and SBA can “split” outstanding debt, resulting in a 35.7% LTV for each institution

 

Business Expenses Scenario:

  
Appraised Value:
$10,000,000                                                      
Outstanding Debt:
$  5,000,000
   
50% Lender Participation:
$  2,750,000
SBA 504 Loan: $  2,750,000
Available for Business Expenses: $  3,500,000
Equity In Property: $  1,000,000