Refinancing a Non-SBA Commercial Real Estate Loan? Turn to the SBA 504 Refi’s Low Rate for Savings


June 18, 2021

The SBA 504 Refinance Program offers small business owners, who own the building their business occupies, the opportunity for refinancing their existing non-SBA guaranteed commercial loan to a more affordable and beneficial SBA 504 loan. 

The SBA 504 Refi and the SBA 504 are part of the U.S. Small Business Administration slate of loan programs that business owners can obtain through approved lenders. The SBA 504 is specifically for business owners looking to purchase commercial real estate and/or large equipment to help them expand or modernize their operations.

SBA 504 options include 10-year, 20-year and 25-year terms. The SBA 504 Refinance program loan is intended to refinance existing non-SBA guaranteed commercial debt.

SBA 504 Refinance Program Loan

The SBA 504 Refinance Program gives business owners the option to refinance one or more non-SBA guaranteed commercial loans. Better yet, with SBA 504 Refi interest rates falling to historic lows, now is the time to take advantage of the opportunity to save money on monthly mortgage payments with a simple straight refinance of the current balance or by refinancing current balance, take out allowable cash equity, and with the prevailing interest rates and terms possibly having lower or equal mortgage payments you have today. Refinance frees up cash for other business needs – offering the right time to finance growth.

Crucially, though, for many business owners, it can be a tool to support recovery from the ongoing impacts of the coronavirus. Stay-at-home orders hit the bottom lines of many small businesses hard. An SBA 504 Refi loan could generate needed cash at the perfect time.

“By refinancing, small business owners lower their monthly payments, which improves their cash flow,” said Mike Owen, FE Small Business Finance’s chief credit officer. “That gives them more cash to pump back into their business, which can drive recovery, growth or expansion.”

Below-Market Interest Rates 

Effective rates for the SBA 504 Refinance Program (effective June 11 – July 8, 2021):

  • 25-year Refi Rate – 2.599%
  • 20-year Refi Rate – 2.524%

Effective rates for the SBA 504 loan (effective June 11 – July 8, 2021) are just as attractive:

  • 25-year Rate – 2.597%
  • 20-year Rate – 2.522%
  • 10-year Rate – 2.644%


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SBA 504 Refinancing Options 

Straight refi: Small business owners can refinance up to 90% of the property’s appraised value. In other words, the loan-to-value can be as much as 90% of value even when you are combining multiple term loans secured against the property into a single loan.

Cash-out refi: Borrowers can tap into their equity to use as working capital for their business to cover costs such as hiring, inventory and day-to-day operations. In this case, the maximum loan-to-value is 85%. As much as 20% of the appraised value can be tapped as working capital.


Requirements for the SBA 504 Refinance Program

  • Refinancing one or more non-SBA guaranteed commercial loans secured to the same “Eligible Fixed Asset.” 
  • Loan(s) that are at least 24 months old, and in good standing, with no deferments, for the last 12 months.
  • Your business must have been operating for two or more years with no full or partial ownership changes prior to the refinancing application. 
  • Appraisal is not required to submit a refinance application, but will be a condition of funding. 
  • Business must be at 51% occupancy at the time of application submission. 

Eligible Project Costs

  • Fees associated with the loan – appraisal, environmental, title, points/interest on interim financing.
  • Any expense of the small business now due, or becoming due within 18 months of the SBA 504 loan application, can be incorporated into the loan as working capital.


And remember, any small business owner who is interested in the SBA 504 Refinance Program can be prequalified fast – in just 24 hours. Contact a loan expert at FE Small Business Finance to start now.

Whether for cash flow to fuel recovery or growth, the SBA 504 Refinance Program can be the right answer for your small business financing needs. And the impressively low rates may be an even bigger incentive to choose to refinance now.

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FE Small Business Finance is a trusted small business lender, award-winning nonprofit and advocate for entrepreneurs. Over more than four decades, we have provided $18 billion in funding to over 11,000 borrowers … and counting. Unlike a traditional lender, we have the flexibility to offer affordable loans to underserved small business owners. Our lending also plays a role in bolstering economic development, and has helped to create or preserve more than 200,000 jobs in California, Arizona and Nevada.

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