April 11th, 2017 9:21 AM by Karen Schimpf
Note! Since writing this piece, the program has been updated as
follows-NOW 85% for CASH OUT REFINANCE! And if significant expansion is
being done, EVEN SBA debt can be refinanced! HUGE UPDATE!
June, the SBA began to take applications for the new 504 Refinance
program. The program allows small businesses that own their properties
to refinance with low fixed rates in the 4's and 5's and pull cash out
up to 75% for business purposes. The true benefit will be in the
amortization that will amortize these loans over a 20-23 year blended
Let me give you an example. John bought the property his
business is in 10 years ago for $800,000. At the time, he put down 25%
and took out a $600,000 loan at 5.5% with a 20 year amortization from a
local bank. His current payment is $4127 a month. After 10 years he
still owes $450,000. His business has done well but even though his
sales have stayed up, he is netting less than before as inflation and
competition have eaten at his profits. Over the years, he had to
borrower on various loans and credit cards to purchase business assets
or meet cash flow needs. Let's say he owes $100,000 on various lines and
cards and his payments on these various lines are roughly $2000 a
month. John's debt looks like this
$450,000 mortgage loan
$100,000 business debt
$550,000 total debt. And his payments on that debt equal $6,127.
his building has appreciated and is worth $1,000,000. The 504 Refinance
allows cash out up to 25% of the value of the building for business
debt and even upcoming debts for the next 18 months like unpaid
payables, payroll, etc. We could refinance him and have it look like
$450,000 Mortgage payoff
+$100,000 business debt
+$150,000 working capital, cash for business use
$700,000 new mortgage.
debt would be a $400,000 first and a $300,000 second from the SBA. The
blended rate on the two loans would be roughly 5.1% and the blended
amortization would be 23 years.
HIS NEW PAYMENT FOR THE 504
REFINANCE OF BOTH THE FIRST AND THE SECOND WILL ONLY BE $4312! Not only
would he save almost $2000 a month-a huge savings for a small business,
he would get $150,000 in cash to use for his business-essentially free
of payments! WOW!
There is not enough space in this column to
share all the nuances of the program and refinances of just mortgage
debt and closing costs can go all the way up to 90%! EVEN ON HOTELS AND
SPECIAL USE PROPERTIES! A very hot program. IF YOU OR SOMEONE YOU KNOW
OWNS A BUSINESS AND THE BUILDING THE BUSINESS IS IN, GIVE US A CALL AT
(512)650-8630 TO SEE IF THIS FINANCING PROGRAM WORKS FOR YOU. Usually
within just a few minutes I can determine the savings and the potential
benefit. It costs nothing to have me pre-qualify so give me a call today
at (512)650-8630. Talk to you soon!
P.S. Current SBA
loans can NOT be refinanced on this program unless it is a significant
expansion and approved. The debt must be non-government debt. But any
business that owns the building it is in has an opportunity to refinance
that debt with LONG TERM FIXED RATES in the 4's or low 5's AND pull
CASH OUT at the LOWEST PAYMENTS POSSIBLE. It is a GREAT opportunity.
CALL ME TODAY TO SEE IF YOU QUALIFY AND TO ANSWER ANY QUESTIONS YOU MAY
HAVE at (512)650-8630 ! CALL TODAY!