On occasion it can be beneficial to refinance your commercial loan. With the U.S. Small Business Administration bringing back the SBA “504” loan refinance program it is about to become a lot easier.
Small business owners may be interested in refinancing their commercial loans for any of a number of reasons. Maybe they want to lock in a fixed, low-interest rate for a long period. Maybe they need to improve the business’s cash flow. Maybe they are trying to pay off their loan early and want to refinance at a lower interest rate in hopes of being able to absorb the prepayment penalty or maybe they have multiple debts and just want to consolidate the payments into one.
Whatever the reason, come June 24, it will be easier for small business owners to refinance their loans. Why?
The U.S. Small Business Administration will be bringing back the SBA “504” loan refinancing program.
Refinancing Your Commercial LoansUsing SBA 504 Is Right For You
Some version of the Small Business Administration has been around since 1932. The SBA as it is known today was not established until 1953 with the passing of the Small Business Act. Since its inception, the organization was tasked with helping small businesses.
In 2011 a program was established so the SBA could help small businesses refinance their loans—the 504 Loan Refinance Program. However, it was meant to be temporary and shut down on September 27, 2012. Qualifying businesses were allowed to refinance their high-interest rate loans with low, fixed rate loans offering longer terms.
Borrowers were not required to expand their businesses with the influx of cash they would receive, but could instead build up their wealth.
Things To Consider When Refinancing Your Commercial Loans
Like every other government mandated program, there are restrictions and key issues that borrowers need to keep in mind when they start to consider refinancing their commercial loans. For one, the mortgage to be refinanced needs to be at least a couple years old. You must be able to prove that you have made all your payments in the last year.
The property the mortgage is for has to be at least 51 percent owner occupied and meet all normal requirements of the 504 loan program. Existing government-backed loans are not eligible; only loans from commercial institutions. Businesses can only receive a loan with a maximum value of 90 percent.
If you want to take advantage of this program, you better be ready to act once the program becomes active again in a few days. It took some time to get the refinancing part of the program reinstated, and it would take no time at all for the federal government to decide to shut it down.
So you are better off doing it sooner rather than later if you want to take advantage of a useful government program—because we all know those don’t come around every day.
Dennis Dahlberg Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.