Small business owners who own commercial real estate and face a balloon payment or rate increase may have recourse in the SBA’s new refinance program. Brought about by the U.S. Jobs Act, the program uses the traditional SBA 504 loan structure, with 50% of the proceeds being carried by a bank, 40% by a Certified Development Company like CDC Small Business Finance, and a 10% down-payment by the small business. The small business owners may be able to rely on existing equity in their real estate to serve as their injection in the refinance.
Additional features of the new REFI program:
- Low fixed interest rate – currently 5.14%
- Fully amortized over 20 years
- Possibility to consolidate other business debt into the loan
- More flexible qualification criteria than conventional bank loans