SBA 504 Loan – Refinance

John had a great business idea! He wanted to open a small, specialized health food store in Austin, Texas. He researched the business, wrote up a business plan, and decided to make it happen. One little problem, John didn’t have any money to get his small business off the ground. He took a risk and borrowed $10,000 to start a store called SaferWay. His small store grew, and he refinanced his loan so he could buy another property and expand into a small chain of stores. That small chain of stores eventually grew and merged with a larger national grocer. If you haven’t guessed it yet, yes, we are talking about John Mackey, founder and CEO of Whole Foods, which is now estimated to be worth $16 billion.


What is the SBA 504 loan program?

SBA 504 loans are sometimes called CDC/504 loans (Certified Development Companies), they are small-business loans offered by Certified Development Companies and backed by the federal government. This type of loan is one of three main US Small Business Administration loan programs. The other two programs are a 7(a) loan and a microloan – each of which have specific applications to small businesses. In this blog, we’ll talk about the SBA 504 loan program for refinancing.

SBA 504 loans are available for property purchases or for buying expensive pieces of equipment to improve or expand your business. They are a great option for small businesses who want to make big purchases and don’t have cash, investors, or other available funds.


Why an SBA 504 loan instead of a conventional loan?

SBA 504 loans have several advantages over conventional loans for businesses seeking to buy property or expensive pieces of equipment. Some advantages include:

  • Lower interest rates
  • Lower down payment
  • Longer amount of time to pay off the loan
  • Does not have a balloon payment or call provision
  • Lower closing fee costs
  • Government guarantee


What is a SBA 504 refinance loan?

While it is true that most SBA loans are used to help fund a new business, 504 loans are different. The SBA 504 loan refinance program’s purpose is to make borrowing more affordable for a large variety of businesses. This type of loan can be used to refinance previous debt incurred by small businesses for commercial real estate or fixed assets. 504 refinancing is unique because it needs to be combined with a bank loan. That means the money for the 504 loan comes from three places:

  • The owner of the business: They take out the loan and put down 10%
  • The lender or bank
  • A Certified Development Company

SBA 504 refinance loans are geared to help pay off debt, improve your percentage rate and give you longer to pay the debt – all while helping you expand and improve your business.


How can I refinance with an SBA 504 loan?

The SBA loan refinancing program is an important tool that will allow you, the business owner, to refinance current debt into a 504 loan. You are not allowed to refinance an existing 504 loan, however. All loans refinance with a 504 loan must also be subsidy free (without government payments or incentives.) Here are the steps to obtaining a 504 refinance loan:

  • Debt must be a commercial loan: The best loans to use a 504 refinance for are conventional loans that you might have used to start your business.
  • 85% of your original loan must have been used for fixed assets such as land, equipment, building, etc.. If you spent more than 15% paying off old debt or for working capital, you won’t qualify.
  • The debt must be 2 years old or older.
  • You’ll need 10-15% down (depending on your lender) to secure the loan.
  • The business must have eligible assets that can be used as collateral for the loan.
  • Refinancing requires that you have been in business for at least 2 years – a 504 refinance is not for new start-ups.


Who offers an SBA 504 refinance near me?

There are several lenders in our area that can help you decide if you are eligible for this type of loan refinance and who can walk you through the application process. Lenders in our area are:


ARK-TEX Regional Development Company

L.D. Williamson, Executive Director

P.O. Box 5307, 4808 Elizabeth St.

Texarkana, Texas 75501

Phone: 903.832.8636

Fax: 903.792.3012


GreaterTX Capital






What will I need to prepare to see if I’m eligible for the SBC 504 refinance?

Here is a quick list of documents you’ll need to find out if you are eligible for the SBC 504 refinance program:

  • Updated business plan
  • Business and personal tax returns (3 years)
  • Financial statements for both business and personal
  • Accounts payable and receivable
  • Balance sheet statements, profit and loss (3 years)
  • Cost of intended property or asset (documentation such as the real estate listing, price estimate, or equipment supply estimate)


For additional information on what the SBA 504 refinance loan is, what it can be used for and to decide if you can qualify, please contact us at the Small Business Development Center – SBDC – Serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.