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SBA 504 Program Enhancements: Refinance & ALP Express Updates


In response to the COVID-19 pandemic, the federal government doubled down on U.S. Small Business Administration (SBA) lending as a key economic recovery tool and enacted several SBA 504 program enhancements that continue today. Congress made changes to the 504 REFI and created the 504 ALP Express Loan (ALP Express) program. Below are the latest details on these impactful lending opportunities:

SBA 504 Refinance 

The 504 refinance option allows small businesses to restructure existing debt on their commercial real estate. Borrowers can leverage built-up equity and take money out for eligible operating expenses – the cash out piece ranges up to 20% of the appraised value of the fixed assets.

On October 12th, the SBA published its Final Rule for SBA 504 Debt Refinancing (88 FR 70580). These changes went into effect on November 13, 2023, and make it easier for more borrowers to benefit from the debt refi program. Highlights include:

  • Property must be minimum 51% owner-occupied and meet all other SBA 504 eligibility guidelines
  • Loan was incurred at least 6 months prior to 504 REFI application date
  • Loan secured by eligible fixed assets for at least 6 months
  • For refinance without expansion, the “substantially all” standard is reduced from 85% to 75% for Qualified Debt – now the SBA will only require 75% of the proceeds of an existing loan to be defined as fixed assets to be eligible
  • May include debt subject to a federal guarantee, such as an SBA 7(a) or 504 loan
    • In the case of refinancing an existing 7(a) loan into a 504 – there is no longer a requirement to obtain a letter from the current 7(a) lender indicating they are unwilling to modify their existing loan; instead, the CDC must notify the existing 7(a) lender in writing
    • In the case of refinancing an existing 504 loan – the new CDC must notify the CDC of the existing loan in writing

Learn more about how the refi program is a win-win for traditional lenders and small business borrowers.

SBA 504 ALP Express Loan Program 

In section 328 of Public Law 116-260, also known as the Economic Aid Act, Congress granted the SBA the authority to establish a 504 ALP Express Loan Program. Certified Development Companies (CDC) participating in the program may expedite the approval, authorization, and closing of certain loans less than $500,000. As the popularity of the 504 program continues to grow, the ALP Express will be a great option for smaller projects to access capital faster. One of the main goals of the ALP Express is to support a focus on smaller commercial real estate loans, which ultimately helps the industry serve even more small businesses, while also modernizing the program.

Eligibility is limited to CDCs, like SomerCor, that have been awarded Accredited Lender Status by the SBA. The Express Program was set to expire on September 30, 2023, but the SBA introduced a new ALP Express Pilot that will remain in effect until September 30, 2025. 

Sign up for the SomerCor e-newsletter to receive the latest updates on these program enhancements. For additional information, connect with a member of SomerCor’s loan origination team.

Contact Us

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Margaret Griffin

EVP, Chief Lending Officer
(312) 360-3320
mgriffin@somercor.com

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Eric Bacon

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Darin Gehrke

SVP Market Lead for Central and Southern Illinois
(217) 793-1075
dgehrke@somercor.com

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Elisabeth Williams