The Small Business Administration (SBA) recently announced changes to make the SBA 504 Refinance Loan Program even more accessible. These changes to eligibility criteria aim to make the SBA 504 refinance loan available to more small businesses by making the following revisions to current policy:
- Raising the loan-to-value maximum on refinance loans without expansion that includes cash out for other business operating expenses from 85% to 90% and eliminating the 20% cap on Eligible Business Expenses (EBE)
- Aligning both 504 refinance loan programs (with/without expansion) so that both require only 75% of the original loan to have been used for eligible fixed assets (prior to these new changes, this “substantially all” standard only applied to the debt refi without expansion).
- Revising the “substantial benefit test” when refinancing other government debt by removing the 10% lower payment requirement and allowing more flexibility for the small business borrower
- Allowing certain “other secured debt” to be included as an Eligible Business Expense in a refinance without expansion