Pub. 11 2023 Issue 2

SBA 504 Loan Refinance Program

An Empowering Tool for Small Businesses Amid Rising Interest Rates and Economic Uncertainty

In the face of mounting economic challenges and fluctuating interest rates, small businesses are on the hunt for reliable financial tools. The Small Business Administration’s (SBA) 504 Loan Refinance Program stands out as an impressive solution for owner-occupied commercial real estate. This program delivers more than just immediate financial relief; it offers a sustainable path forward for our local businesses, and, by extension, for the bankers who serve them.

At the heart of the SBA 504 Loan Refinance Program are three pivotal benefits that small businesses find enticing:

  1. Competitive Interest Rates: Rather than succumbing to the often-high interest rates, adjustable rates, or balloon/demand features of traditional commercial real estate loans, this program offers competitive, fixed rates, potentially saving businesses thousands in interest over the loan’s lifespan.
  2. Extended Repayment Terms: The pressures of monthly repayments can be a significant burden for businesses. By offering lengthened repayment terms of up to 25 years, the SBA 504 Loan Program ensures payments are more manageable.
  3. Access to Capital: Whether it’s for expansion, rent replacement or capitalizing on growth opportunities, the SBA 504 Loan Program can unlock additional capital, empowering businesses to stay competitive and grow.

But this program doesn’t only benefit businesses. For the banking community, the SBA 504 Loan Refinance Program is an opportunity to enhance our portfolio, boost our financial returns and deepen our commitment to local businesses.

Here’s how:

  • Expanding Customer Base: The program’s inclusivity opens doors to a broader range of customers, compared to traditional commercial real estate loans, allowing them to serve a more diverse group of businesses.
  • Enhancing Financial Returns: While it offers lower interest rates for borrowers, the SBA 504 loan program can yield higher returns for bankers, leading to a healthier bottom line.
  • Meeting Community Lending Goals: By assisting local small businesses, we strengthen our communities while retaining jobs. The SBA 504 Loan Refinance Program aligns perfectly with that goal.

Now, to understand how the SBA 504 Loan Refinance Program works, let’s demystify it a bit. It’s essentially a two-party loan program, involving the SBA with a certified development company (CDC), and a commercial lender. The SBA and CDC provide up to 40% of the loan amount, the bank partner offers up to 50%, and, typically, the remaining 10% can be sourced from the equity in the small business’s property. The loan is secured by the business’s real estate.

Eligibility for the program is straightforward. The business must be for-profit and located in the U.S. The business needs to have been in operation for at least two years. The note to be refinanced must have been in place for six months and 85% of the original proceeds need to have been used for 504 eligible costs. That includes the property and improvements made to it. Cash-out is allowed and cannot be more than 20% of the total project with a loan to value ratio of 85%. Application is as simple as contacting a CDC. They will assess eligibility and guide businesses through the application process.

By partnering with a CDC, you’ll be offering an invaluable service to your small business clients, helping them navigate financial uncertainty, and setting them up for future growth. But it’s not just about serving your customers — it’s also about fostering relationships, enhancing your financial returns, and meeting your community lending goals.
The SBA 504 Loan Refinance Program isn’t just a lifeline for businesses; it’s a testament to a collective commitment to fostering a robust and resilient small business community. 

B:Side Capital, a Certified Development Company (CDC) is a trusted provider of SBA 504 loans in Utah, Colorado, Arizona and New Mexico. Our team of seasoned professionals can help bankers assess their clients’ eligibility, navigate the application process, and close the loan. Moreover, we offer resources to help bankers better understand the SBA 504 loan program. Visit to learn more.

Chris Myers is an accomplished executive, entrepreneur, and author, joining the team with over 10 years of experience starting and growing companies to scale. As B:Side’s Chief Executive Officer, Chris is an innovative pioneer, entrepreneurial enthusiast, and small business zealot. Ultimately, he ensures that the organization remains aligned with our mission to provide access to responsible capital to small businesses.