The SBA 504 Refinance Program is a strategic commercial real estate debt restructuring solution for small businesses. (Sample clients: RMC Stadium Cinemas / Aquascape, Inc.) Here are SomerCor’s Five FAQ’s about the SBA 504 Refi to help lenders and their small business clients access this financing tool:

What are the borrower benefits of the SBA 504 Refi?

  • Lower monthly mortgage payments
  • Fixed 20 or 25 year low interest rate – currently at historic lows of 2.62% and 2.59% respectively
  • Payment predictability
  • The option to leverage built-up equity and take cash out for eligible working capital expenses

What debt is eligible for the SBA 504 Refi?

  • Mortgage to be refinanced must be at least 2 years old
  • Borrower must be current on payment for the preceding 12-month period (COVID-19 deferments permissible)
  • Restricted to owner-occupied commercial real estate projects
  • Government guaranteed loans (504 & 7a loans) are ineligible

What expenses are eligible uses for cash-out funds?

  • Salaries (non-owners)
  • Rent
  • Utilities
  • Inventory
  • Business line of credit and business credit card debts
  • Capital expenditures, personal expenses and acquiring a new business or business partnership buyout are ineligible

What are the key features of the SBA 504 Refi structure?

  • Maximum 90% LTV with no cash-out, or
  • Maximum 85% LTV with cash-out for eligible operating expenses
  • Bank has first mortgage on the project property

What type of business is eligible to participate in the SBA 504 Refi program?

  • For-profit business
  • Under $15 million in tangible net worth
  • Prior 2 years average after tax net income under $5 million

This debt restructuring tool is a good fit for all these industries and more:

  • manufacturing
  • industrial warehouse/logistics
  • health care
  • professional services
  • hospitality
  • retail
  • franchises
  • senior care facilities
  • education & child cares

Download the program flyer and connect with a member of SomerCor’s loan origination team today to learn more!


Brian Comiskey                Elisabeth Williams           Eric Bacon                           Joseph Bailey
Chief Lending Officer      VP, Loan Officer               VP, Loan Officer                  AVP, Loan Officer
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