Community Business Finance

? How does a business grow when its capital is locked up in its building? The SBA 504 Refi programs allow owners to use existing equity to expand or renovate their real estate, add equipment, or fund eligible business expenses to conserve working capital.

The SBA 504 Refi Program – a 2-Part Series Part 2: Refi With Expansion This article addresses another popular SBA program involving real estate refinancing, the SBA 504 Refi With Expansion. This program has been refined in the past few years, helping more small and medium-sized businesses grow and prosper. ? How does the SBA 504 Refi With Expansion benefit a business? It accesses existing equity to help expand the business's real estate or equipment assets without diminishing working capital reserves. It also improves cash flow by extending the existing debt’s amortization to 25 years and securing a below-market, fixed interest rate. ? ? Can you refinance an existing SBA loan? Yes, both conventional and SBA loans can be refinanced. ? ? What are the basic requirements to qualify? The request must involve the acquisition, construction, or improvement of land, renovation of an existing building, or ground-up construction of a new building for the business's use. The amount of the refinanced note cannot exceed the funds needed for real estate and equipment. The SBA 504 financing is limited to 90% of the market value of the real estate and equipment collateral. At least 75% of the original debt must have funded 504-eligible real estate or equipment assets. The original debt may not have included funding for personal expenses or non-business investments. The portion of the new installment payment amount attributed to the refinanced debt must be less than the existing installment amount. The qualified debt must be an eligible commercial loan incurred at least six months before the date of application. All other standard SBA eligibility requirements apply. ? ? Is the maximum LTV for special-purpose real estate the same as general-purpose real estate? Yes, currently, the maximum LTV for special-purpose real estate is also 90%. However, this is subject to change based on economic conditions. ? ? Can a business pull out cash from the real estate if there is enough equity? No, that is not possible under this program. Working capital for business operations, also called Eligible Business Expenses (EBE) by the SBA, can only be funded using the SBA 504 Refi Without Expansion program previously discussed in part 1 of the series. In other words, the SBA will either allow the business to withdraw cash or invest in the building, but not both, on the same loan. ? ? In addition to the typical credit application documents such as tax returns and financial statements, are there any other essential items necessary to apply for either of SBA’s refinance programs? Yes, the lender must order an appraisal of the real estate at the time of the application because the loan structure will be determined based on the value of the project “as is.”

The SBA 504 Refi Program – a 2-Part Series Part 2: Refi With Expansion This article addresses another popular SBA program involving real estate refinancing, the SBA 504 Refi With Expansion. This program has been refined in the past few years, helping more small and medium-sized businesses grow and prosper. ? How does the SBA 504 Refi With Expansion benefit a business? It accesses existing equity to help expand the business's real estate or equipment assets without diminishing working capital reserves. It also improves cash flow by extending the existing debt’s amortization to 25 years and securing a below-market, fixed interest rate. ? ? Can you refinance an existing SBA loan? Yes, both conventional and SBA loans can be refinanced. ? ? What are the basic requirements to qualify? The request must involve the acquisition, construction, or improvement of land, renovation of an existing building, or ground-up construction of a new building for the business's use. The amount of the refinanced note cannot exceed the funds needed for real estate and equipment. The SBA 504 financing is limited to 90% of the market value of the real estate and equipment collateral. At least 75% of the original debt must have funded 504-eligible real estate or equipment assets. The original debt may not have included funding for personal expenses or non-business investments. The portion of the new installment payment amount attributed to the refinanced debt must be less than the existing installment amount. The qualified debt must be an eligible commercial loan incurred at least six months before the date of application. All other standard SBA eligibility requirements apply. ? ? Is the maximum LTV for special-purpose real estate the same as general-purpose real estate? Yes, currently, the maximum LTV for special-purpose real estate is also 90%. However, this is subject to change based on economic conditions. ? ? Can a business pull out cash from the real estate if there is enough equity? No, that is not possible under this program. Working capital for business operations, also called Eligible Business Expenses (EBE) by the SBA, can only be funded using the SBA 504 Refi Without Expansion program previously discussed in part 1 of the series. In other words, the SBA will either allow the business to withdraw cash or invest in the building, but not both, on the same loan. ? ? In addition to the typical credit application documents such as tax returns and financial statements, are there any other essential items necessary to apply for either of SBA’s refinance programs? Yes, the lender must order an appraisal of the real estate at the time of the application because the loan structure will be determined based on the value of the project “as is.”

The SBA 504 Refi Program – a 2-Part Series Part 2: Refi With Expansion This article addresses another popular SBA program involving real estate refinancing, the SBA 504 Refi With Expansion. This program has been refined in the past few years, helping more small and medium-sized businesses grow and prosper. ? How does the SBA 504 Refi With Expansion benefit a business? It accesses existing equity to help expand the business's real estate or equipment assets without diminishing working capital reserves. It also improves cash flow by extending the existing debt’s amortization to 25 years and securing a below-market, fixed interest rate. ? ? Can you refinance an existing SBA loan? Yes, both conventional and SBA loans can be refinanced. ? ? What are the basic requirements to qualify? The request must involve the acquisition, construction, or improvement of land, renovation of an existing building, or ground-up construction of a new building for the business's use. The amount of the refinanced note cannot exceed the funds needed for real estate and equipment. The SBA 504 financing is limited to 90% of the market value of the real estate and equipment collateral. At least 75% of the original debt must have funded 504-eligible real estate or equipment assets. The original debt may not have included funding for personal expenses or non-business investments. The portion of the new installment payment amount attributed to the refinanced debt must be less than the existing installment amount. The qualified debt must be an eligible commercial loan incurred at least six months before the date of application. All other standard SBA eligibility requirements apply. ? ? Is the maximum LTV for special-purpose real estate the same as general-purpose real estate? Yes, currently, the maximum LTV for special-purpose real estate is also 90%. However, this is subject to change based on economic conditions. ? ? Can a business pull out cash from the real estate if there is enough equity? No, that is not possible under this program. Working capital for business operations, also called Eligible Business Expenses (EBE) by the SBA, can only be funded using the SBA 504 Refi Without Expansion program previously discussed in part 1 of the series. In other words, the SBA will either allow the business to withdraw cash or invest in the building, but not both, on the same loan. ? ? In addition to the typical credit application documents such as tax returns and financial statements, are there any other essential items necessary to apply for either of SBA’s refinance programs? Yes, the lender must order an appraisal of the real estate at the time of the application because the loan structure will be determined based on the value of the project “as is.”

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Another 504 Success Story! Entrepreneur: Minority woman-owned and operated full-service automotive repair shop in Montgomery, Texas, established in 2016. Real Estate Opportunity: SBA 504 Loan funded the purchase of a 5,000-square-foot auto garage, currently leased, to build equity and reduce occupancy costs. Financing Package: Texas-based?Community?Bank $372,500 1st Lien Conventional Loan ? Community Business Finance & the U.S Small Business Administration: $308,000 2nd Lien SBA 504 Loan At your service... Bill Ebersole Vince Calicchia La Tisha Venters Jeanne Bergeron Community Business Finance

Using the SBA 504 to Refinance Real Estate...

?? SBA 504 Funding Update: $1.3M Real Estate Acquisition ?? Entrepreneur: Family-owned?roofing business established in 2013, providing roof replacements and repairs for residential and commercial customers Real Estate Opportunity: SBA 504 funded the purchase of a 7,700-square-foot warehouse to consolidate operations, build equity, and control occupancy costs. ?? Financing Package ?? Texas-based?Community?Bank $652,300 1st?Lien Conventional Loan ? Community Business Finance & the U.S Small Business Administration $500,000 2nd Lien SBA 504 Loan At your service... Bill Ebersole Vince Calicchia Jeanne Bergeron La Tisha Venters

Planning for the Unplanned - Succession Plans and Life Insurance A comprehensive succession plan or appropriate life insurance is essential for a small business led by a sole operating individual. This long-term planning ensures stability and continuity during leadership transitions. SBA lenders should evaluate whether a business’s long-term viability is linked to the owner-operator guaranteeing an SBA loan. A succession plan or life insurance is necessary for sole proprietorships or single-member LLCs where the owner’s participation is critical, especially if the SBA loan isn't fully collateralized. If the lenders determine that business viability isn’t tied to the individual owner, this should be well-documented in the credit memo and application package submitted to the SBA. Click here for the full article on this topic: https://lnkd.in/gEXxfMSP At your service... Bill Ebersole Vince Calicchia Jeanne Bergeron La Tisha Venters