Thursday, October 6, 2016 - Article by: Winstonrowe - Winston Rowe & Associates -
Business owners with a conventional commercial property mortgage can finally take advantage of the low fixed rates on government guaranteed loans through the Small Business Administration (SBA) 504 Refinancing Program
The SBA 504 Program can refinance up to 90% loan-to-value; 75% on cash-out loans
A borrower can leverage up to 90 percent of the value of a commercial property to pay off qualifying debt. An SBA 504 loan is made up of a first and a second lien. An SBA lender provides up to 50 percent of the value of the property on the first loan and a non-profit organization authorized by the SBA called a Certified Development Company (CDC) funds the government guaranteed second loan up to40 percent.
The refinance can include cash-out to cover eligible business operating expenses such as salaries, rent, utilities, inventory, or other obligations of the business but the maximum loan-to-value would be lowered to 75 percent.
Small Business Administration (SBA) Programs:
Eligible Locations: MSA's within the U.S. and its territories exhibiting strong economic and property-type specific fundamentals
Eligible Use: Acquisition and Refinance of Owner-Occupied, Hospitality, Multi-Use and Special Purpose Properties
Loan Amount: $500,000 Up to $14,000,000
Loan Term: Up to 25 Years
Amortization: Up to 25 Years
Loan to Value: Up to 90% of FIRREA Appraised Value. Minimum 1.20x DSCR on in-place cash flow
DSCR: Minimum 1.20x DSCR on in-place cash flow
Reserves: Tax and Insurance
Sponsor (s): Creditworthy individual(s) acceptable to Lender with sufficient liquidity and net worth
Borrowing Entity: Operating entity that will occupy the commercial real estate
Assumability: Yes, in case of building sale for $1000 assumption fee
Prepayment: 5-Year Prepayment Penalties
The objective at Winston Rowe & Associates is to add value to a client's commercial real estate acquisition or refinance by offering a wide range of financing solutions through their direct access to top national, regional, and local retail banks, hedge funds, hard money and private capital lenders.
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