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Program Note! Since writing this piece, the program has been updated as follows-NOW 85% for CASH OUT REFINANCE! And if significant expansion is being done, EVEN SBA debt can be refinanced! HUGE UPDATE!
Last June, the SBA began to take applications for the new 504 Refinance program. The program allows small businesses that own their properties to refinance with low fixed rates in the 4's and 5's and pull cash out up to 75% for business purposes. The true benefit will be in the amortization that will amortize these loans over a 20-23 year blended term!
Let me give you an example. John bought the property his business is in 10 years ago for $800,000. At the time, he put down 25% and took out a $600,000 loan at 5.5% with a 20 year amortization from a local bank. His current payment is $4127 a month. After 10 years he still owes $450,000. His business has done well but even though his sales have stayed up, he is netting less than before as inflation and competition have eaten at his profits. Over the years, he had to borrower on various loans and credit cards to purchase business assets or meet cash flow needs. Let's say he owes $100,000 on various lines and cards and his payments on these various lines are roughly $2000 a month. John's debt looks like this
$450,000 mortgage loan
$100,000 business debt
$550,000 total debt. And his payments on that debt equal $6,127.
Today, his building has appreciated and is worth $1,000,000. The 504 Refinance allows cash out up to 25% of the value of the building for business debt and even upcoming debts for the next 18 months like unpaid payables, payroll, etc. We could refinance him and have it look like this:
$450,000 Mortgage payoff
+$100,000 business debt
+$150,000 working capital, cash for business use
$700,000 new mortgage.
This debt would be a $400,000 first and a $300,000 second from the SBA. The blended rate on the two loans would be roughly 5.1% and the blended amortization would be 23 years.
HIS NEW PAYMENT FOR THE 504 REFINANCE OF BOTH THE FIRST AND THE SECOND WILL ONLY BE $4312! Not only would he save almost $2000 a month-a huge savings for a small business, he would get $150,000 in cash to use for his business-essentially free of payments! WOW!
There is not enough space in this column to share all the nuances of the program and refinances of just mortgage debt and closing costs can go all the way up to 90%! EVEN ON HOTELS AND SPECIAL USE PROPERTIES! A very hot program. IF YOU OR SOMEONE YOU KNOW OWNS A BUSINESS AND THE BUILDING THE BUSINESS IS IN, GIVE US A CALL AT (512)650-8630 TO SEE IF THIS FINANCING PROGRAM WORKS FOR YOU. Usually within just a few minutes I can determine the savings and the potential benefit. It costs nothing to have me pre-qualify so give me a call today at (512)650-8630. Talk to you soon!
Karen
P.S. Current SBA loans can NOT be refinanced on this program unless it is a significant expansion and approved. The debt must be non-government debt. But any business that owns the building it is in has an opportunity to refinance that debt with LONG TERM FIXED RATES in the 4's or low 5's AND pull CASH OUT at the LOWEST PAYMENTS POSSIBLE. It is a GREAT opportunity. CALL ME TODAY TO SEE IF YOU QUALIFY AND TO ANSWER ANY QUESTIONS YOU MAY HAVE at (512)650-8630 or check out www.ApplyCommercialLoans.com! CALL TODAY!
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