Boost your bank’s loan production
The SBA 504 Refinance Loan program is an opportunity for small businesses owners to refinance their existing commercial real estate loan, which functions under similar terms as a typical SBA 504 loan program.
Minimize risk by limiting your bank’s exposure to 50% of the total project costs
Generate new fee income coupled with a quality portfolio loan
Free up your client’s trapped equity
Combined LTV (1st & 2nd) up to 90%
Up to 25-year, below-market, fixed interest rate for the 504 loan
General Guidelines
Refinance owner-occupied commercial real estate or long-term equipment
Requires an appraisal dated within 12 months
Existing SBA 504 or 7(a) loans may be eligible to refinance under certain circumstances
The majority of loan proceeds must have have been used for eligible 504 costs
Refi with Expansion interest rate matches the regular 504 rate
Standalone Refinance interest rate is slightly higher than the Refi with Expansion rate
STANDALONE REFI REQUIREMENTS
75% of the original loan proceeds must have been used for eligible 504 costs
51% occupancy at the time of application submission
Maximum refinance LTV:
90% of the value of collateral pledged for existing mortgage or secured debt(s) with or without including cash out for "Eligible Business Expenses"
85% of the value of collateral pledged when mortgage refinance request also includes “Eligible Business Expenses”
Cash out is allowed:
Can be used for Eligible Business Expenses incurred within 18 months and the payoff of business credit cards or lines of credit
Renovations and equipment cannot be funded with the cash out, but repairs may be eligible
Loan(s) must be at least six months old and on permanent terms without any recent disbursements
Business must be operating for two full years or more
The appraised value is used to determine project costs and equity
REFI WITH EXPANSION REQUIREMENTS
75% of the original loan proceeds must have been used for eligible 504 costs
Allows for existing debt to be refinanced when substantial expansion is part of the project
A minimum of 1:1 ratio of new expansion costs to existing debt to be refinanced is required. (For example, a $500,000 existing loan could be refinanced if there are $500,000 or more of new, expansion costs)
Expansion can include on-site renovations, construction, or equipment purchase and/or a purchase of a second property for the small business
A substantial benefit reflecting a reduction in payments or the refinance of a note with a balloon payment is required.
“My experience with B:Side Capital was a smooth one. The SBA 504 refinance program is a great option because it allows the marketplace the ability to receive better terms on their owner-occupied real estate financing. In my deal, I was able to save my client around $161,000 annually. We refinanced their SBA 7(a) which had a floating rate of PRIME + 2.75%. My assigned loan officer with B:Side was very accessible, helpful in answering various borrower questions, and the B:Side portal is very user-friendly. I enjoyed my experience in working with B:Side and look forward to assisting many other businesses in our marketplace through the SBA 504 other businesses in our marketplace through the SBA 504 refinance program!”
-Louie LeJeune, Vectra Bank Colorado
