Most Impactful Change: For a note to qualify for the 504 refinance program under the new rules, 75% of the original funds must have been used to:
This is a decrease from the previously required 85%, greatly expanding the number of loans eligible for the SBA 504 debt refinancing.
This change is particularly advantageous for those looking to refinance an existing 7(a) loan, which may have been previously ineligible due to the original loan including a bit too much working capital or other soft costs that prevented meeting the 85% rule.
This change will take effect on November 13th, 2023. Lenders can use the 504 refinance program as a tool to ease cash flow constraints resulting from rising rates for both current borrowers as well as prospective borrowers.
The SBA 504 program enables you to serve your current clients while also obtaining new prospects. Through this program, you can enhance your commercial financial portfolio, positioning your institution as an innovative and strategic partner for your clients.
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