Updated Sba 504 Refinance Rules: What You Need To Know In 2023

by Rino Abdulah Mei 27, 2023 Posting Komentar

Introduction

As a business owner, you might be familiar with the Small Business Administration (SBA) 504 loan program. This program provides long-term, fixed-rate financing for major fixed assets such as land, buildings, and equipment. What you might not know is that the SBA also offers a refinance program for existing debt. In 2023, the SBA has updated its 504 refinance rules to make it easier for small businesses to access this program. Here's what you need to know.

Eligibility

To be eligible for the SBA 504 refinance program, your business must have been in operation for at least two years, and the debt you are refinancing must be for eligible business expenses. Additionally, the debt must have been incurred at least two years prior to the application date, and the original loan must not have been used to refinance debt.

Loan Terms

Under the updated rules, the SBA 504 refinance loan can be up to 90% of the appraised value of the collateral securing the debt being refinanced. The loan term can be up to 25 years for real estate and 10 years for equipment. The interest rate on the loan is fixed for the life of the loan, which can provide stability for your business.

Use of Funds

The SBA 504 refinance program can be used to refinance debt that was used to acquire eligible fixed assets, such as real estate and equipment. The program can also be used to refinance debt that was used to improve fixed assets, such as renovations and additions. The program cannot be used to refinance debt that was used for working capital or to pay off credit card debt.

Application Process

To apply for the SBA 504 refinance program, you will need to work with a Certified Development Company (CDC). The CDC will help you prepare the application and submit it to the SBA. The application will require financial statements for your business, as well as information about the debt you are refinancing. The SBA will review the application and make a decision on whether to approve the loan.

Benefits of the SBA 504 Refinance Program

There are several benefits to using the SBA 504 refinance program. First, it can provide a lower interest rate than traditional financing options. Second, it can provide a longer repayment term, which can lower your monthly payments. Third, it can help you consolidate multiple debts into a single loan, which can simplify your finances. Finally, it can provide stability for your business by fixing your interest rate for the life of the loan.

Conclusion

The SBA 504 refinance program can be a valuable tool for small businesses looking to refinance existing debt. With the updated rules in 2023, it is now easier than ever to access this program. By working with a CDC and preparing a strong application, you can take advantage of the benefits of the SBA 504 refinance program and improve the financial health of your business.