Debt Refinance Guide (Without Expansion)

There has never been a better time to refinance existing debt with the SBA 504 Loan Program!

  • Fixed-Interest Rates for the Life of the Loan
  • Cash Out – Provide needed liquidity for eligible business expenses
  • Improve Financial Institution’s LTV
  • Improve Borrower’s Cash Flow

Step 1: Basic Eligibility

  • Must be considered a Qualified Debt
  • Substantially all (75% or more) of the proceeds were used for 504 eligible purposes (To acquire land, land and building, construct a building, or purchase equipment)
  • Qualified debt must have been in place for at least 6 months prior to SBA application
  • Was incurred for the benefit of the small business
  • Has been secured by Eligible Fixed Assets for at least 6 months
  • May include debt subject to a federal guarantee, under certain conditions

    • If the loan being refinanced is guaranteed by a Federal agency other than SBA, the CDC must document in writing that the refinancing of the Federally-guaranteed loan is permissible under the other Federal agency’s requirements or is otherwise approved by the other Federal agency
    • If refinancing an existing 504 loan then TPL loan and 504 loan must be refinanced
    • Must notify existing CDC or 7(a) lender in advance of refi loan application submission to SBA (10 biz days)
  • Current on all payments due removed but still use prudent lending practices
  • Applicant must be in operations for 2 years prior to refi
  • Must meet 51% or more occupancy requirement at the time of SBA application

Step 2: Required Documentation*

* In addition to standard 504 application items

  • Current note & lien/security instruments – demonstrate in place for minimum of 6 months
  • Transcripts for prior 12 months or length of time debt has been in place if less than 12 months
  • Documentation evidencing 75%/25% test
  • Certification that all business line or credit card debt was used for Eligible Business Expenses, if applicable
  • Substantial Benefits Test documentation – GLCF can assist with this
  • Itemization of Eligible Business Expenses, if applicable

Step 4: Contact Us

Ready to Start a Refi Project? Reach Out Today!

Important Information

    1. You can finance special use properties up to 90% with this program (it’s been waived since August 2020), this could change
    2. Can include cash out for Eligible Business Expenses (EBE)
      • Business operating expenses incurred but not paid at SBA application date or that will become due within 18 months of SBA application date.
      • May include accrued expenses (such as salaries, rent, utilities), inventory, and other business expenses – no capital expenditures.
      • May include other business debts if: Debt meets definition of other secured debt, OR Business lines of credit and business credit card debt used for business expenses (needs to have been secured for at least 6 months, must be current on all payments due)
        • Examples of Other Secured Debt uses: ¡ “day-to-day” expense, Materials, Inventory, Working capital
        • Other secured debt does not include debt used for capital expenditures
      • Applicant and CDC must certify in the loan application that the debt being refinanced was incurred exclusively for EBE
      • No limitations other than 90% LTV max on project
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