SBA Updates

As of April 21, 2014 the U.S. Small Business Administration (SBA) eliminated provisions that prevented small business owners with a high-net worth to purchase commercial real estate with a SBA-504 loan. These changes will enable more small businesses to qualify for SBA loan to purchase commercial real estate and/or long-life equipment.

Personal Resource Test Eliminated.  Business owners are no longer subject to SBA’s Personal Resources Test which restricted high-liquidity individuals from using SBA programs.

9-Month Rule Eliminated.  If an expense can be documented and justified for the benefit of the small business and towards a Commercial Real Estate purchase, this expense can be counted towards the total project.

These new changes will allow more small business to take advantage of SBA 504 financing.


On April 5, 2018, SBA released Information Notice 5000-17058 announcing the availability of a 25 year maturity for 504 Loans and the Debentures that fund them. This is in addition to the 10 and 20 year 504 Loan and Debentures that are currently available in the 504 Loan Program. 

  • The 25 year 504 Debenture is available for 504 Projects that are approved on or after April 2, 2018.
  • The term of a 504 Debenture for any 504 Project approved prior to April 2, 2018 may not be extended to 25 years.
  • The voluntary prepayment schedule will stay at 10-years for the 25-year loans, the same as for 20-year loans.
  • The term of the Third Party Loan accompanying a 25-year 504 Loan must be at least 10 years.
  • The fee structure is the same as for 20 year loans and debentures.
  • The first pooling date for 25 year debentures will be no earlier than July 2018. Rates for the 25 year debenture are determined at the time of funding and are anticipated to be set at a spread above the 20 year debenture rate. Actual rates will not be known until the debentures are presented for sale. SBA expects to offer this Debenture funding monthly.

New Small Business Refinance Program to Launch June 24

Under the new refinance program, small businesses can take advantage of lower rates, fixed for 20 years, to lighten their monthly debt payments, improve cash flow and stabilize operations. The program allows for refinancing commercial real estate debt as well as other business debt and expenses.

Here are some of the guidelines for the new program:

  • Single purpose or special use properties such as hotels, assisted living, etc are eligible up to 90% LTV even though they would typically require more equity to be eligible for a 504.
  • 75% of the original debt had to be used to finance real estate and up to 25% of the debt to be refinanced could have been used for other business uses.
  • Debt to be refinanced must be in place at least two years from application date.
  • Business must have been in operation for two years prior to application date (and cannot have full or partial ownership change).
  • Max LTV is 90% if the refi includes real estate and equipment debt.  If refi includes cash out for “eligible operating expenses,” the max LTV is 75% with business operating expenses not to exceed 25%.
  • The loan to be refinanced must be current for the last 12 months.
  • You cannot refi an SBA 7a, 504, USDA or any other government loan