Improvements to SBA 504 Refinancing!

SBA made significant improvements to SBA 504 refinancing…a lending program already in high demand nationwide!    The effective date is November 15, 2025, with additional details being available in a Final Rule published in theFederal Register on October 1, 2024.

 

SBA 504 Refinance Improvements Include:

• Raising the loan to value requirement to 90% on debt refinancing without expansion that includes other business expenses and eliminating the cap on Eligible Business Expenses

 

• Aligning the “substantially all” standard for 504 debt refinancing with expansion to be consistent with 504 debt refinancing without expansion standard of 75% – a consistent standard between the two 504 debt refinance programs expands access and streamlines loan processing.

 

• Allowing certain “other secured debt” to be included as an Eligible Business Expense in 504 debt refinancing without expansion

 

• Revising the substantial benefit test for 504 debt refinancing with and without expansion when refinancing other government debt – This change provides flexibility to allow any payment improvement to meet the requirement and expands borrower access. In its policy and procedure notice, SBA may clarify (as they have in prior guidance) that additional borrower benefits can meet this test – i.e., refinancing balloon payments.

 

In today’s environment of higher interest rates and liquidity issues, these beneficial changes will make it easier to capitalize on the benefits the SBA 504 Refinance Program can provide.

 

Big Benefits of SBA 504 Refinancing

• Low, fixed interest rate on 504 – check out the interest rate history
• Long loan terms – up to 25 years
• Refinance up to 90% of the appraised property value (if no cash-out)
• Access cash in the building for salaries, rent, inventory, utilities, payables, etc.
• The borrower’s equity in the collateral often fulfills the down payment requirement
• Payment stability
• Protection from balloon payments
• The ability to consolidate multiple loans
• Up to $5 million for SBA portion of loan, no limit on overall project size
• Keep your lender or allow us to match you with one of our lending partners

 

How Does SBA 504 Refinancing Work?

A 504 refinance loan is set up in the same way as the standard 504: It offers low, fixed rates on loans with 20- or 25-year terms that are fully amortized.  A commercial bank provides a 1st mortgage and the SBA (through Growth Corp) provides a second mortgage.  As the small business, your contribution is typically as low as 10%, which is often covered by the equity from the property itself. If that’s not possible, cash or other assets can be used.

You can refinance up to 90% of the current appraised value of the property.

 

Cash Out for Working Capital 

The SBA 504 Loan Program offers business owners the opportunity to secure below-market, fixed interest rates, amortized over 25 years, for up to 90 percent of the appraised value of commercial real estate property.

Loans are administered by a Certified Development Company (CDC) such as Growth Corp and granted in conjunction with a conventional lender (usually a bank).  That way, with the 504, the borrower’s equity injection is typically much lower than traditional business loans and can help you keep more of your cash in the business rather than tied up in real estate.  Plus, existing equity in the collateral often fulfills the down payment requirement.

 

504 Loans:  A Powerful Tool for Strengthening and Growing Your Business

Refinancing your commercial mortgage with an SBA 504 loan can help you free up trapped capital and enjoy lower monthly payments due to the low, long term, fixed interest rate.  An SBA 504 loan can also be used to:

• purchase land or buildings
• construct, upgrade or renovate buildings
• purchase equipment with a service life of ten years or more

SBA 504 loans are a very powerful tool, yet they remain under-utilized because many small business owners just aren’t aware this financing option exists.  In FY2024, 504 loans helped fuel $6.7 billion in new capital investments for nearly 6,000 businesses throughout the U.S.

 

Small businesses can refinance debt, reduce a line of credit or payables and obtain working capital using a 504 Refinance Loan

 

Will My Project Qualify?

 

Why Growth Corp?

We know your success depends on having access to expansion capital that is both affordable and accessible.  Our experienced staff takes pride in making a difference in the lives of small business owners and their employees.  Start-ups to seasoned businesses and everything in between can benefit from working with Growth Corp.  Here’s why:

• We’re the #1 SBA 504 Lender in Chicago and Illinois.  Growth Corp also consistently ranks as one of the top ten SBA 504 Lenders nationwide.
• SBA recognized Growth Corp as an Accredited Lender after a thorough review of its policies, procedures and prior performance.  The prestigious ALP status grants Growth Corp increased authority to process and close 504 loans, which provides expedited processing of loan approvals and closings.
• We simplify the loan approval process.  Our team coordinates the entire process from application through closing, funding and servicing, making it seamless for you and your bank lender.
• We are SBA 504 Experts.  Our responsive and educated staff focuses almost exclusively on SBA 504 loans.  We’ve got the process down to a science!
• We’ve worked with thousands of businesses, spanning various industries.  That means, there’s not much we haven’t seen.  Your goals, project structure and business type will likely be familiar to us and we’ll understand your unique situation.
• Our mission is to advocate for small business.  We love our communities and believe small business is the foundation of their economic prosperity.  We will do all we can to support you and your business goals.  Connect with someone from our lending team today!