New SBA 504 Debt Refinance Rules as of November 13, 2023

Maximum Loan is $90,000 per Employee

Highlights published in the October 12, 2023 Federal Register

A loan that is subject to a guarantee by a Federal agency or department may be refinanced under the following conditions and requirements:

An existing 504 loan may be refinanced if both the Third Party Loan and the 504 Loan are being refinanced or the Third Party Loan has been paid in full. If the 504 Loan being refinanced received approval through another CDC, the CDC working on the current refinancing must provide advance notice to the other CDC in writing (by email or letter).

An existing 7(a) loan may be refinanced if the CDC notifies the 7(a) lender in advance in writing (by email or letter).

The refinancing will provide a substantial benefit to the borrower. For purposes of this paragraph (g)(3)(iii), “substantial benefit” means that the portion of the new installment amount attributable to the debt being refinanced must be at least 10 percent less than the existing installment amount(s). 

The 504 loan amount maximum is based on the number of employees @ $90,000 per employee.

Example: 30 full-time employees and 35 part-time employees working 20 hours per week is calculated as follows: 30 + (35 × (20/40)) = 47.5. The maximum amount of the 504 loan would be 47.5 multiplied by $90,000, or $4,275,000.

CDC Closing Fees cannot exceed $10,000

Read the Notice here