SBA 504 Refi News: Improvements to the 504 Refi Program

November 3, 2016    504

Improvements to the 504 Refi Program

  1. 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.
  2. 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.
  3. 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.