504 Refinance Requirements

SBA 504 Refinance for "Owner Occupied" Commercial Real Estate - 2016

504 Refinance Requirements

Updated May 25, 2016: Full guidelines for the 2016 SBA refinance program are due out soon. Lenders are accepting applications now. Here are the guidelines that are known at the moment:

  • Single purpose or special use properties such as hotels, assisted living, etc are eligible up to 90% LTV even though they would typically require more equity to be eligible for a 504. Not sure about other properties like golf courses or bowling centers, yet. 
  • 75% of the original debt had to be used to finance real estate and up to 25% of the debt to be refinanced could have been used for other business uses.
  • Debt to be refinanced must be in place at least two years from application date.
  • Business must have been in operation for two years prior to application date (and cannot have full or partial ownership change).
  • Max LTV is 90% if the refi includes real estate and equipment debt.  If refi includes cash out for “eligible operating expenses,” the max LTV is 75% with business operating expenses not to exceed 25%.
  • The loan to be refinanced must be current for the last 12 months.
  • You cannot refi an SBA 7a, 504, USDA or any other government loan

This page will be updated as more information is available. The complete rules may look similar to the "Refinance Rules" further down the page with a few major exceptions. (90% cash out, etc.).

SBA 504 Refinance Program Made Permanent

WASHINGTON, May 27, 2016 /PRNewswire-USNewswire/ -- Eligible small business owners now have more options to refinance eligible fixed assets and business expenses through the Small Business Administration (SBA) 504 Refinance Program.  SBA Administrator Maria Contreras-Sweet made the program permanent through an Interim Final Rule in The Federal Register released May 26, 2016. This change will help small business owners ease their financial burdens and create incentives for potential expansion and further job creation.

In making the announcement, Contreras-Sweet said: "As both a former small business owner and a banker, I know firsthand that access to capital is the single most important factor in the survival and growth of a small business.  The 504 loan program with its long term fixed-rate can help refinance debt from adjustable rate loans with significant savings to borrowers.  Paying off existing loans with a new loan at a lower cost can help increase cash flow, which can be especially helpful in a resurgent economy.  That's why I'm so proud to announce this Final Rule making 504 Refi permanent."

As outlined in the Interim Final Rule announcement, SBA will begin accepting applications from small business owners effective June 24, 2016.  Also, concurrent with the announcement, a public comment period will begin for the public to make recommendations that SBA will review for further program enhancements in the future.  The public comment period will end July 25, 2016. 

"For some time now, we've been making the case for the 504 Refinance Program with lawmakers, and now small businesses will have access to $7.5 billion under this program. Congress heard the combined voices of small business, lenders and SBA, and made the 504 Refinance Program permanent – a measure that I'm sure will prove essential in helping small business expand and strengthen the nation's economy," Contreras-Sweet said.

On December 18, 2015, Congress passed the Consolidated Appropriations Act of 2016, which made the 504 Debt Refinancing Program a permanent part of the 504 Loan Program. The 504 Refinance Program was originally a temporary measure under the Small Business Jobs Act of 2010.  This temporary debt refinance program expired on September 27, 2012.

SBA is authorized to approve up to $7.5 billion for the regular 504 Loan Program and $7.5 billion in lending authority under the 504 Debt Refinancing Program, which brings the total 504 lending combined authorization to $15 billion.

The 504 Debt Refinancing Program is authorized to operate only in fiscal years during which the subsidy costs to the government are zero. 

For more information on eligibility and documentation requirements, please see Policy Notice 5000-1382.

About the U.S. Small Business Administration
The U.S. Small Business Administration (SBA) was created in 1953 and since January 13, 2012, has served as a Cabinet-level agency of the federal government to aid, counsel, assist and protect the interests of small business concerns, to preserve free competitive enterprise and to maintain and strengthen the overall economy of our nation.  The SBA helps Americans start, build and grow businesses.  Through an extensive network of field offices and partnerships with public and private organizations, the SBA delivers its services to people throughout the United States, Puerto Rico, the U.S. Virgin Islands and Guam. 

Release Number: 16-48