Refinance Loans with an SBA 504 Debt Refi
East Texas Regional Development Company • December 10, 2020
The year 2020 has been full of ups and downs and has been especially difficult for small businesses. But with historically low-interest rates, now is the time to reach out to your existing customers and prospects to refinance those debts with a Small Business Administration
504 Debt Refi without expansion.
- With the 504 Refi, the 50-40-10 rule doesn’t apply!
- Refi, without expansion, can use loan-to-value to structure the financing.
- Net 504 loan amount cannot exceed 40% of the financing.
- 504 Refi amount cannot exceed the amount of the third party loan but can equal it.
Example:
$1 Million Refi Loan
Split $500,000 TPL & $500,000 Net Debenture
Since the 504 refi cannot exceed 40% of value, the appraised value must be no less than $500,000/40% = $1,250,000. We get this financing structure:
- TPL: $500,00
- 504 net: $500,000
- Equity: $250,000
You can change total project costs to the value of the real estate, it's not going to change your financing.
The borrower already owns the real estate, and its contribution is the equity it already has. And you just offered them a 25-year fully amortized loan at a low-interest rate for absolutely nothing down!
Need more information? Contact our Community and Economic Development Manager, Chuck Vanderbilt, today.
Executive Director David Cleveland has named Luke Kimbrough as the new Regional Lending Manager for the East Texas Council of Governments (ETCOG). In this role, Kimbrough will oversee the day-to-day operations of the East Texas Regional Development Company’s (ETRDC) small business loan programs. He will work closely with the ETRDC Board, manage financial and administrative services, and ensure the program follows all state and federal guidelines. Kimbrough brings with them more than seven years of experience in banking and employee benefits. Before accepting this position, Kimbrough served as CEO of the Banking Center at Citizens Bank in Gladewater. His previous roles include Vice President at First National Bank of Hughes Springs in Liberty City, Benefits Consultant for Colonial Life in Longview, and Branch Manager for Regions Bank in Kilgore. Before his banking career, Mr. Kimbrough served for several years as the Director of Public Information and Regional Services at ETCOG. “It is a great pleasure for me to welcome Luke back to the ETCOG Family! His exceptional work in the banking community for many years position him for even greater success with our ETRDC Business Lending Programs. I am glad he is back and am even more excited to see the steady growth and expansion of one of our most important economic development programs that will undoubtedly occur under his leadership!” said Executive Director David Cleveland. “I am excited to come back to ETCOG and the East Texas Regional Development Company,” said Kimbrough. “Spending the last decade in banking, I have gained much more experience in financial analysis and commercial lending. There is a lot of work ahead to help the businesses and economy of East Texas.” The ETRDC is a nonprofit organization that is certified and regulated by the U.S. Small Business Administration. Its main purpose is to support local economic development by helping small businesses access long-term, fixed-rate financing. ETRDC offers financing through the SBA 504 Loan Program and Chapman Loan Program.
The East Texas Regional Development Company will sponsor an East Texas Lenders Roundtable hosted by UT Tyler-Longview Small Business Development Center (SBDC) and the Small Business Administration to discuss SBA 7a loans and 504 lending basics. Expert panelists will discuss various loan programs and resources to help businesses increase their portfolios and obtain financing.
The Office of the Governor has announced the launch of a new recovery program, the Texas Travel Industry Recovery Grant Program (TTIR), which will begin accepting applications on July 6, 2022. The purpose of this program is to provide grants to Texas businesses in the tourism, travel, and hospitality industry that were negatively impacted due to COVID-19.
