The Small Business Administration (SBA) has published the final rule for SBA 504 Debt Refinancing without expansion under the 504 program. The final rule is effective TODAY, June 6, 2018. With the final rule published, there are positive modifications to the program:
- The interim rule specified that the qualified debt that is being refinanced must be 2 years old, however the final rule has added that this “2 year old debt may include modifications or refinances within this 2 year period if it was for a maturity date extension.”
- The interim rule stated that the borrower needs to have been current on payments for the last year prior to application. Additionally, the final rule states that if there was a note modification or refinance done to extend the maturity date within 1 year of application, the borrower need to have been current on payments due during the 1 year period. Both before and after the modification or refinancing; there are no deferments of any payments during the 1 year period.
- The final rule clarified that on a refinance of qualified debt for a special purpose property, 15% borrower contribution is needed. However, the Third Party Lender does not have to be at least 50% of total project costs.
- The final rule extended the SBA 504 Loan disbursement deadline to 9 months and SBA may approve an additional 6 months for good cause.
- The final rule codifies that the cash out for eligible business expenses cannot exceed 20% of value of the 504 Eligible Fixed Assets securing the qualified debt and maximum loan to value is 85%.
Now’s the time to secure long term fixed rates for your small business customers!
Give your MBFC Loan Officer a call today!