Breaking News: SBA 504 Refi Applications will begin processing in June 24th, 2016. Here are the details.

May 23, 2016    504


SBA 504 Refi Applications will begin processing June 24th, 2016. Here are the details.
We were live from SBA Administrator Maria Contreras-Sweet’s keynote speech at the NADCO Spring Summit conference. In her speech, she announced SBA will begin taking 504 refi applications in June.

Here are the specifics of the refi program:

1. The rules are at Federal register now. Will be published this Wednesday. Applications can begin being processed on June 24th with SBA;

2. guaranty fee for refi deals will be 95.8 basis points;

3. Program mandates: 504 program must be at zero subsidy to remain active;

4. job creation or job retention or economic development goals MUST still exist like the regular 504 program;

5. Debt must have been existence for 2 years and can be more than one eligible loan;

6. all payments for the last year must be current (not past due over 30 days);

7. on a stand-alone refinance, 90% Loan to Value is the maximum. Borrower may pledge additional assets to meet the 90% requirement;

8. no SBA or USDA loans are eligible;

9. cash out allowed for business expenses BUT cash out portion cannot exceed 25% of the appraised value of the fixed asset, and, in no instance, can cash out deals go above a 75% loan to value (when combined with an eligible mortgage refinance);

10. the application must include a transcript of the previous 12 month payment history to confirm payment currency;

11. SomerCor will internally verify that the liens have existed for 2 years from the date of application and document the loan file accordingly;

12. Revised SBA forms will be in existence;

13. appraisals will not be included at application but must be dated within 6 months of application;

14. all occupancy requirements still exist (51% or more)

If you have any owner-occupied, conventionally financed transactions that might benefit from 20 year fixed rates through the SBA 504 loan program, please contact one of your SomerCor loan officers listed below.

This is an exciting time in 504 lending and SomerCor is standing by to assist you with your loans that are coming due or with borrowers getting nervous about long term interest rates.

We have been waiting since December 2015 for the rules of this game changing program to be announced and they are finally here.

If you have already contacted us about a refinance opportunity, will will reach out to you soon to ascertain how your specific transaction works within the parameters of the program. In the coming days, further clarification on some of the salient regulations will surely be gleaned. We will keep you updated as details emerge.

Now is the time to begin investigating opportunities that can take advantage of this critical 504 program change. SomerCor is looking forward to assisting you and your clients every step of the way.

SomerCor will be rolling out a series of webinars and live, in-person, presentations in the coming weeks to better educate our community on the impact of these new SBA 504 refi regulations.