SBA 504 Refi News: Improvements to the 504 Refi Program
November 3, 2016 504
Improvements to the 504 Refi Program
- Effective mid-November, the SBA has changed the Loan-to-Value limitation on
refinance projects that include cash-out for eligible business operating
expenses. The LTV limitation has been increased from 75% to 85% providing
greater flexibility within the permanent refinance program to tap into the equity
of owner-occupied properties. The business operating expenses portion of the
project may not exceed 25% of the total project.
- The SBA has also loosened the restrictions of ownership changes of small
businesses in the two years prior to a refinance application. Provided such
ownership change did not result in new, unproven ownership/management and
increased debt unrelated to business operations – the business will likely be
eligible for a refinancing project and not need to be considered a “new
business” and ineligible for refinancing.
- Finally, refinance applications may use appraisals dated no earlier than one
year prior to the date the application is approved. Originally appraisals within 6
months of approval were required.