Permanent Debt Refinance

504 Permanent Debt Refinancing

Starting June 24th, SBA began accepting applications for the refinance of existing commercial mortgages. Please send us any potential debt refinance applications today so we can begin processing and underwriting!

The highlights of the program are outlined below; however, feel free to contact us to discuss a specific transaction or just to get more information!

Borrower eligibility is the same as a regular 504 loan EXCEPT:

  1. Borrower must have been in business for at least two years
  2. Debt being refinanced must be secured by the fixed assets and must be at least two years old
  3. 85% of the original loan must have been for real estate or equipment
  4. 100% of the original loan (and any refinances) must have been for business purposes
  5. Any debt being refinanced must have been current for the last 12 months
  6. For refinances secured by real estate, the operating company must occupy at least 51% of the project property, with no more than 49% leased to third-party tenants

Eligible Costs

  1. Existing debt on owner-occupied commercial real estate or equipment  (cannot be SBA debt)
  2. Other debt (i.e. a line of credit) secured by the same fixed assets
  3. Closing expenses
  4. Eligible business expenses (cash out) NOT to exceed 25% of the value of the assets in #1 including:
    • Utility bills, rent, salaries, inventory
    • Expenses can be incurred but unpaid or to be incurred in the next 18 months


  1. For commercial mortgage and other debt only – 90% LTV
    • Additional collateral may be posted to achieve 90% LTV
  2. When eligible business expenses (cash out) are included, LTV is limited to 75% and eligible business expenses (cash out) are limited to 25% of the value of the fixed asset; additional collateral cannot be used to increase the amount of “cash out”

Fees / Costs

  1. All regular 504 costs apply and are financed in the 504 loan
  2. The Third Party Lender fee of 0.5% on the first trust applies