SBA Refinancing: Options for Small Business Owners

Running a small business is an endeavor that is filled with satisfaction and rewards. It is also a line of work that requires certain choices concerning financing. When it comes to Small Business Administration (SBA) refinancing, it’s not always the easiest process in the world. However, there are some ways to achieve an SBA loan. Here is a look at a few ways the SBA refinancing process can be made smoother for small business owners.

Refinance Due to Expansion

One of the most constructive and positive ways to apply for a small business loan is to ask for SBA refinancing because your previous efforts have been so successful. Prepare your paperwork and have all your documentation ready when you approach the financial institution with your request to refinance. It makes financial sense to think that SBA loans would be awarded to small business owners who have already achieved their initial goals and are now expanding their businesses further.

Consider the SBA 504 Loan Program

The SBA 504 Loan program is designed quite similarly to that of a refinancing loan. As a business owner, you not only can refinance commercial real estate, you can also cover other business-related debt such as operating lines of credit, cash out for operating expenses going forward, and other existing business debts.

There are a few key things to keep in mind when it comes to the 504 loan. First, the small business borrower must contribute 10 percent equity to the loan, which is typically equity achieved using the existing commercial real estate already owned by the applicant. Next, two loans finance the project needs by providing a first mortgage (through a bank or credit union) with lien of 50 percent of the project cost and the second mortgage with a mortgage which covers up to 40 percent of the cost comes from an SBA certified development company (CDC). Finally, according to SBA’s own guidelines, refinancing by the 504 loan program is designed for long-term customers who are interested in improving and growing their business.

In Summary: SBA Refinancing

As a business owner, it makes sense to consider SBA refinancing while overseeing the status of your business practices. Refinancing has many benefits. For example, SBA loans will allow you to lower the amount of money your monthly payments require, get multiple debts consolidated, lower your interest rates, and reduce the frequency of the payments that your business makes.

The odds of survival in running a small business are very good, with the number of businesses that last five years or more hovering around 50%. So, the numbers are in your favor; the effort and persistence that may be necessary for obtaining SBA financing will probably pay off in the long run. Your result could be the satisfaction of having your company as one of the success stories in the world of small business ownership.

Let LCD Group Help Your Small Business

As a CDC, Lewis & Clark Development Group is able to help you with all your small business financing needs. Contact Tracy Whitney, SBA 504 loan program officer, at (701) 667-7602 or at tracy@lcdgroup.org.

More information about the SBA 504 Loan program may also be found here.

 

 

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