RDC webinar – 504 Loans during the COVID-19 crisis

Play recording (35 mins)

Contact Niccole Zell at niccole@rdc504.org to apply

How to Qualify

  • Business has been in operation for a minimum of two years
  • Business occupies 51% or more of the real estate square footage (investment property is not eligible)
  • Real estate is commercial property (residential property is not eligible)
  • Loan was entered into a minimum of two years ago
  • Loan has been current for past 12 months
  • Loan was originally used to purchase or improve commercial real estate
  • Loan is currently financed using conventional bank financing (government backed loans not eligible, including SBA 7a, SBA 504 1st and 2nd mortgages, USDA loans)

 

Debt Refinance Only

You can refinance existing debt up to 90% of the current appraised value

New appraisal required at application.

Example:
Appraised value: $2,000,000
Existing loan: $1,000,000
Loan-to-value 50%

 

Example:
Appraised value: $2,000,000
Existing loan: $1,800,000
Loan-to-value 90%

 

 

Cash Out Refinance

Total Loan-to-Value cannot exceed 85%

Cash out cannot exceed 20% of the appraised value

Eligible costs that can be paid using the cash out:

  • Inventory
  • Accounts payable
  • Payoff / pay down of line of credit
  • Payoff of business credit card debt
  • Working capital expenses

Debt Refinance Structure Examples

Appraised value $1,000,000
85% of appraised value $850,000
Current debt to be refinanced $500,000
Available equity for cash out- 20% of appraised value $200,000

 

Appraised value $1,000,000
85% of appraised value $850,000
Current debt to be refinanced $250,000
Available equity for cash out – 20% of appraised value $200,000

 

Appraised value $1,000,000
85% of appraised value $850,000
Current debt to be refinanced $850,000
Available equity for cash out $0- Maximum 85% already reached