If you took out a traditional commercial real estate loan, you likely would have a significant balloon payment looming over your head. Instead of dealing with the stress and worry of whether or not you’ll be able to make that big payment, you may want to consider refinancing with an SBA 504 loan.
Most commercial loans are structured with a balloon payment, a large lump sum due at the end of the loan term which can leave a borrower in a risky situation. If you are unable to make that big balloon payment (and who knows what the future holds these days?), you risk losing your property to short sale or foreclosure.
That’s why, if you’re eligible, refinancing with a 504 loan is a smart move. You can minimize your risk associated with that immediate balloon payment and have up to 50% of your new loan with no balloon payment- EVER! You can enjoy longer loan terms, typically 20 – 25 years for real estate, with a low, fixed rate. Refinancing can save you money and help you sleep better at night! And there’s more…you can even get cash out for eligible business expenses under the 504 refinance program!
Find Out if You Are Eligible
To be eligible for the 504 Refinancing Program (without expansion), your business must have been in operation for at least two years and the debt to be refinanced must be from a commercial lender.
Additionally, the debt to be refinanced must be:
At least two years old.
Used to acquire a 504 eligible fixed asset (i.e., owner-occupied real estate, land, equipment).
Used to benefit your business
Secured by 504 eligible fixed assets.
Also, you must be current on all payments for at least the last 12 months prior to your application. All traditional 504 Loan Program regulations apply to 504 refinancing.
With 504 refinancing, you can refinance up to 90% of the current appraised property value. Just like a traditional 504 loan, a commercial lender finances 50% of the loan and a Certified Development Corporation (CDC) such as SEDCO finances 40%. That leaves the borrower with a 10% down payment and if you have sufficient equity based on your appraisal, you bring no money to the closing table! You can even receive a check at closing for eligible business expenses!
If you want to get out from under that impending balloon payment and rest easier, 504 refinancing may be the ideal solution for you. Talk to one of our fabulous and friendly 504 loan experts and we’ll help you every step of the way. Contact us today!
Sunshine State Economic Development Corporation (SEDCO) is a not-for-profit certified development corporation (CDC) licensed by the U.S. Small Business Administration to offer the SBA 504 Loan Program throughout the state of Florida. SEDCO can provide your expanding small business with alternative financial resources, sound financial advice, and business acumen. Helping small business succeed is our business. For more information, visit our website or contact us!