Borrowers taking advantage of the temporary SBA 504 refinance program with Commercial Loan Direct benefit from better terms and lower rates

Share Article

With the SBA 504 refinance program coming to an end on September 27, 2012, Commercial Loan Direct is seeing more borrowers than ever taking advantage of the higher lending limits and take-out option of the SBA 504 program for owner-occupied properties.

Apartment loans by Commercial Loan Direct

Apartment loans by Commercial Loan Direct

Atlanta’s CLD Capital, is making a call to borrowers with owner-occupied properties that would qualify for SBA’s 504 program

With the SBA 504 refinance program coming to an end on September 27, 2012, Commercial Loan Direct a business division of CLD Capital, one of the top online originators of commercial loans and apartment loans in the country is seeing more borrowers than ever taking advantage of the higher lending limits and take-out option of the SBA 504 loan program for owner-occupied properties.

Commercial Loan Direct, a business division of Atlanta’s CLD Capital, is making a call to borrowers with owner-occupied properties that would qualify for SBA’s 504 program. They say that now is the time to take advantage of this program, especially for borrowers that have properties that are difficult to refinance through conventional means, before it ends this coming fall.

USES. Proceeds may be used for the refinance of existing commercial loans whose proceeds were used substantially (85%) to acquire fixed assets eligible for the SBA 504 program. In addition, loan proceeds may be used to pay Eligible Business Expenses such as maintenance of building (no expansion to building), equipment purchases, rent, utilities, inventory or other obligations. These expenses must be incurred but not paid prior to the date of the application or come due within 18 months of the date of the application. All proceeds must have been used for the benefit of the small business concern.

STRUCTURE AND BORROWER EQUITY.

50%, varies - Loan secured by a senior lien from a third-party lender for not less than the net 504 loan.

Up to 40% - SBA 504 Loan secured by a junior lien from CP/SBA.

Not <10% - Borrower equity in the existing real estate and/or cash injection as needed. Additionally, the Borrower may pledge equity in any other fixed assets that are acceptable to SBA as collateral.

The Third Party loan and the 504 loan combined may not be more than 90% of the fair market value of the fixed assets securing the loan. In no event may it exceed the outstanding principal balance of the debt refinanced, eligible business expenses & closing costs.

COLLATERAL. An independent appraisal supporting the fair market value of the fixed assets being refinanced and any other assets being offered as collateral whether commercial or residential must be submitted at SBA application. The appraisal(s) must be dated within six (6) months of the date of application.

FEES. The Borrower is required to pay an annual guarantee fee to cover the cost of the refinancing program in the amount of 1.043%.

ELIGIBILITY REQUIREMENTS.

Commercial Loans being refinanced must have been current for the past year according to the original or modified terms, with no payment being past due for more than 30 days. Any modification must have been entered into prior to issuance of SBA final rule on 10/12/11. A transcript must be provided to demonstrate compliance with this requirement. For the refinancing of same institution debt, the transcript of account for the entire period of the loan must be provided. This will be used to determine the overall creditworthiness of the Borrower.

No refinancing where the creditor on the debt to be refinanced is in a position to sustain a loss; causing a shift to SBA of all or a portion of a potential loss from an existing debt.

Debt being refinanced must have been incurred not less than two years prior to the date the application is received by SBA. Additionally, the small business concern must have been in business for two years prior to the submission of the application.

Debt may be refinanced even if it does not meet the job creation requirement or other public policy goals set forth by the SBA. In such case, the 504 loan size may not exceed the amount obtained by multiplying the number of full-time equivalent employees (40 hour work week) of the Borrower by $65,000.

Borrower must currently occupy 51% of the building being refinanced.

RESTRICTIONS.

No refinancing of loans with an existing federal guaranty; such as an SBA 7(a) or 504 loan or an USDA loan.

No refinancing of debt to an Associate of the Borrower, an SBIC, or New Market Ventures Capital Companies (NMVCC).

When the debt being refinanced is same institution debt, the Third Party Loan cannot be sold on the secondary market as part of a pool of guaranteed loans.

CLOSING.
All loans approved must be closed within 6-months. Loans will be canceled by SBA if not funded during this time period.

When loan being refinanced is Same Institution Debt, either an escrow account or an interim loan may be used. When loan being refinanced is not Same Institution Debt, an interim loan must be used.

Any delinquency on loans being refinanced after SBA approval but before the loan funding must be reported to the SBA as an adverse change.

Approved under the Small Business Jobs Act of 2010, the SBA 504 Temporary Refinance Program allows for the refinance of qualified debt under the SBA 504 Loan Program through September 27, 2012.

View CLD's SBA Commercial Interest Rates

Share article on social media or email:

View article via:

Pdf Print

Contact Author

Leanne Eicoff
Visit website