{"id":7920,"date":"2024-12-10T12:29:15","date_gmt":"2024-12-10T12:29:15","guid":{"rendered":"https:\/\/listselfstorage.com\/us\/industry-insights\/?p=7920"},"modified":"2025-01-08T10:48:31","modified_gmt":"2025-01-08T10:48:31","slug":"sba-504-debt-refinance-just-got-easier","status":"publish","type":"post","link":"https:\/\/listselfstorage.com\/us\/industry-insights\/sba-504-debt-refinance-just-got-easier\/","title":{"rendered":"SBA 504 Debt Refinance Just Got Easier"},"content":{"rendered":"


\n\"Bank<\/p>\n

The SBA has introduced important updates to its 504 refinance program, enhancing flexibility and benefits for business owners.<\/span><\/span><\/span><\/p>\n

Here\u2019s a brief overview of the changes<\/u>:<\/b><\/span><\/span><\/span><\/p>\n

    \n
  1. Expanded Access to Working Capital<\/b><\/span><\/span><\/span>\n

    Previously, borrowers could take out up to 20% of the appraised collateral value for working capital during a refinance, limited to an 85% loan-to-value (LTV) ratio. The new guidelines eliminate this 20% cap and increase the LTV limit to 90%, providing businesses with more financial options<\/span><\/span><\/span><\/li>\n

  2. Eased Refinancing Restrictions on 7a and 504 Loans<\/b><\/span><\/span><\/span>\n

    Before, businesses had to demonstrate a 10% reduction in monthly payments to refinance existing 7a and 504 loans. Now, any reduction qualifies, making it easier for businesses to secure better terms<\/span><\/span><\/span><\/li>\n

  3. Refinancing \u201cOther Secured Debt\u201d<\/b><\/span><\/span><\/span>\n

    Previously limited to \u201celigible debts\u201d (where at least 75% of proceeds were used for real estate or equipment), businesses can now also refinance \u201cother secured debts\u201d that share collateral with eligible debts, expanding refinancing options.<\/span><\/span><\/span><\/li>\n<\/ol>\n

    The impact of these updates, <\/span><\/span>effective November 15<\/b><\/i><\/span><\/span>, is illustrated in the case study below.<\/span><\/span><\/span><\/p>\n

    Consider This Case Study<\/b><\/u><\/span><\/span>:<\/b><\/span><\/span><\/span><\/p>\n

    A self-storage facility faced rate adjustments on a 7a loan used to build its facility 5 years ago.<\/span><\/span><\/span><\/p>\n

    Additionally, they had a term note for working capital and a fully drawn line of credit. Rising rates have strained their cash flow, prompting them to seek lower monthly payments.<\/span><\/span><\/span><\/p>\n

    Key Factors<\/b><\/u><\/span><\/span>:<\/span><\/span><\/span><\/p>\n