As a small business owner, you are more likely to be impacted by the economic market fluctuations. Because of this, you may struggle to remain in business and make a profit. If business loans contribute to your struggles, it may be time to consider refinancing.
When you refinance an existing loan into an SBA 504 loan, you get various benefits that allow you to reinvest in your business and increase cash flow. As an SBA 504 loan provider in Virginia, North Carolina, and Maryland, 504 Capital believes that every small business deserves a chance to thrive. This blog is meant to help guide you through the benefits of the refinancing process and help you see it as a viable option.
How Refinancing to an SBA 504 Loan Works
Like many refinancing programs, refinancing an SBA 504 loan allows you to find better rates and terms while increasing your working capital. SBA 504 loan refinancing can only be used to refinance commercial real estate debt, equipment debt, or construction debt.
In addition, there are a few requirements you must meet to qualify for an SBA 504 loan. These requirements include:
- The existing loan must be at least 6 months old
- The business applying for the refinance must have been operational for two years.
- At least 85% of the original loan must have been used to acquire, construct, or improve fixed assets.
- The business must occupy at least 51% of the total square footage of the property
- Existing government-guaranteed debt is eligible.
Speak with an SBA lender in Virginia, or your state, to learn more about how to qualify.
How Refinancing Can Help Small Businesses
Refinancing an existing business loan into a 504 SBA loan can help small companies remain in business. With better financing terms, consolidated payments, and a lower monthly payment, companies can increase their cash flow and invest back into their business.
Better Financing Terms
Unlike traditional loans, SBA 504 loans offer below-market, low interest rates and have amortization periods up to 25 years. These financing terms provide companies a better option since the loan won’t accrue as much interest.
Refinancing a traditional loan with a 504 loan allows you to consolidate your payments. For example, if you have multiple mortgages on a single property, you may be able to refinance them into a single loan against the property. However, this single loan cannot exceed 90% of the property’s appraised value. An SBA 504 lender in North Carolina, or your state, can help walk you through the process.
With higher interest rates come higher payments. Since financing terms are better than typical loan terms, refinancing your loan into a SBA 504 loan can decrease your monthly expenses. Instead of predominantly going towards interest, you can lower the principal amount much faster.
Increase Cash Flow
Since your monthly payments have decreased, now you can spend more money on your business. Because of this, you can increase your business’s cash flow and reinvest it into your company. See how you can benefit by speaking with an SBA 504 loan provider in Virginia or your state.
SBA 504 Lender in North Carolina, Virginia, and Maryland
504 Capital is an SBA lender in Virginia, North Carolina, and Maryland. Our loan experts work with you to find the best refinancing solution for your company. We provide you with the counseling, support, and refinancing options that help your business grow and thrive.