The SBA 504 program can be utilized to refinance debt secured by commercial real estate as a part of the debt refinance without expansion program. This is a great opportunity for small business owners that have CRE-secured debt during this time of unprecedentedly low rates.
The SBA ordinarily requires that a loan be current for 12 months prior to application – without any late or deferred payments. However, since many conventional loans have been put on deferment as a result of the COVID-19 crisis, the SBA has issued an exception to this rule. A borrower seeking to refinance a loan in deferment into an SBA 504 loan can do so if they meet the following criteria:
- The deferment was granted on or after March 1
- The borrower attests in writing that the deferment was granted as a result of the COVID-19 outbreak
- The borrower can cover the deferred payments and make the loan current