06Reset the terms you signed in a hurry
Refinance, cash-out and debt consolidation
Replace a maturing balloon, pull equity out of a building you have owned for a decade, or consolidate a stack of equipment notes and cards into one amortising payment against real collateral.
The capital stack
- Retained equity25%
- New first mortgage75%
Terms
What this programme actually looks like
- Rate-and-term leverage
- Commonly to 75% of appraised value
- Cash-out leverage
- Lower, and priced for it — the use of proceeds matters to the underwriter
- Prepayment on the old loan
- Step-down or yield maintenance; get the payoff quote before you model anything
- Debt consolidation
- Available under SBA rules when the debt was for the benefit of the business and is on acceptable terms
- Timeline
- 35 to 60 days
Illustrative only. Bollard is a fictional business built as a website demonstration — the figures below are worked examples, not an offer, a quote or a rate sheet.
Fit
When it is right, and when it is not
A lender that only publishes the first list is selling. Both lists below are the same length in real life.
The right instrument when
- A balloon matures inside eighteen months and you would rather not meet it as a surprise.
- The building has appreciated and the business needs capital that is cheaper than a merchant advance.
- Several expensive notes could become one payment at a longer schedule.
- A partner is being bought out and the building is the source of funds.
The wrong instrument when
- The savings do not clear the prepayment penalty inside your holding period. The break-even calculator will show you that in about a minute.
- You are refinancing to fix a cash-flow problem the business has not diagnosed. Debt does not diagnose.
Underwriting
What gets looked at, in what order
- 01
Payoff first
Yield maintenance on a low-rate note can dwarf the saving. Order the payoff quote before the appraisal, not after.
- 02
Seasoning and use
Recently acquired property and cash-out for purposes outside the business are both treated more conservatively.
- 03
The next maturity
A refinance that lands you on another balloon in five years should be a choice you made, not one you inherited.
Worked example
Worked example — maturing balloon, cash-out for equipment
- Existing balance
- $1,180,000
- Appraised value
- $2,050,000
- New loan at 72%
- $1,476,000
- Cash to the business
- $262,000
- Costs and prepayment
- $34,000
A worked example. Your prepayment penalty and closing costs decide whether this trade is worth making.
Questions
What people ask about this programme
Can I refinance a 504 into a new 504?
The programme does allow refinancing in defined circumstances, including with expansion. The rules are specific and they change — a CDC will confirm eligibility before anyone spends money on an appraisal.
How much cash-out is realistic?
Less than a rate-and-term refinance, and the answer depends more on coverage than on value. Size it with the DSCR calculator before you plan around it.
Next bay
Tell us about the building
A twenty-minute conversation is usually enough to know whether a deal works, which programme fits, and what your equity actually supports.
Or call the desk
(816) 555-0142Monday to Friday, 8am – 6pm Central
A demonstration number in the range reserved for fiction. It does not ring anywhere.