How the SBA 504 Debt Refinance Program Can Help Your Business
Jan 28, 2022
If you have ever taken out a loan before, you have probably been encouraged to look into refinancing.
Some people refinance their student loans, their home mortgages, or even their car payments. What many do not know, however, is that there are programs out there specific for business owners who are looking to refinance their commercial debt and get an even better financing deal for their business.
But what are these programs and how are they beneficial? We’re here to share with you everything you need to know about one of our favorites – the SBA 504 Debt Refinancing program - and how it can help you and your business for years to come.
SBA 504 Debt Refinance Program
The SBA 504 Debt Refinancing program is a program offered by the U.S. Small Business Administration in conjunction with a Certified Development Corporation (CDC) like Dakota Business Lending. Through the program, borrowers may be eligible to refinance existing commercial debt, allowing them to restructure their loan payments, possibly cash out equity for business operations, and improve cash flow of the business or accommodate opportunities for growth.
Eligible Ues
Through the SBA 504 Debt Refinancing program, borrowers have the opportunity to refinance certain types of commercial loans, including:
- Existing commercial real estate debt
- Existing debt on equipment and other long-term fixed assets
Other items that can be included:
- Professional fees related to the project
- Cash out for the business operating expenses
Advantages of the SBA 504 Debt Refinancing Program
- Lock in (Even) Low(er!) Rates – One of the greatest benefits that the SBA 504 Debt Refinancing program has to offer is the ability to take loans of higher interest rates and refinance them with a reduced interest rate that will save the business money on a month-to-month basis. With the rumors that federal interest rates will be rising soon, this program is timely as it allows borrowers to avoid the increasing rates and lock in fixed, below-market rates Rates on the 504 portion of the refinance project are fixed for the entire 20- or 25-year term!
- Stretch Out Your Payments – Businesses with loans that have a balloon payment at the end of the term may also find the SBA 504 Debt Refinancing program beneficial. Through this program, borrowers are able to refinance loans that may be close to maturity with a balloon payment, allowing them to stretch out the loan payments over a longer period and reduce the amount of the balloon payment at a later time.
- Get Cash Out for Business Operating Expenses – Lastly, the SBA 504 Debt Refinancing program gives borrowers the option to get cash out for business operating expenses, meaning they can use a portion of their equity in commercial real estate and finance it along with their remaining balance on existing debt to use for business operating expenses over the course of the next 18 months for normal operations, expansions, or even to help with unforeseen events like the impact of COVID-19 on business cash flow.
As you can see, this program offers both short and long-term effects for business owners as they work to grow, expand, and set their business up for success.
For more information on the SBA 504 Debt Refinancing program, you can visit our webpage or download our SBA 504 Debt Refinance Checklist for more specific eligibility details.
Be sure to contact a loan officer in your area for more information on the application and program and find out if you are eligible for this great deal for your business!
The post How the SBA 504 Debt Refinance Program Can Help Your Business appeared first on Dakota Business Lending.
