SBA Improves Cash Flow with NEW 504 REFI Program

Ralph Constantine, Owner of Jamie's Pub & Grill

Is it ready?  Is it ready?  Is it ready? 

That was the question owner Ralph Constantine asked his SBA Certified Development Company specialist, Barbara Arena for about 3 years after the temporary SBA 504 Refinance Program had expired back in September of 2012.

“One of the most rewarding parts about my job is demonstrating how accessible the SBA’s programs have become,” said Barbara, “assisting customers through the streamlined application process ensures a prompt delivery of capital to businesses and allows owners like Ralph to keep his focus where it belongs -- on running his business.”

Patiently waiting for its’ reactivation – Ralph organized his financial house so that Jamie’s Pub & Grill of Whitman would be the first small business in Massachusetts to utilize this money-saving program after being approved by Congress.  


On December 18th of 2015, Congress passed the Consolidated Appropriations Act and within the bill, the SBA 504 Refinance Program was brought back permanently to help small businesses to grow and create jobs.  The program last existed as a temporary program from Feb. 28, 2011, through Sept. 27, 2012 as part of efforts authorized under the Recovery Act to help businesses struggling with debt and the inability to refinance that debt. This time, the program is permanent and SBA began accepting loan packages on June 24, 2016!


While Ralph was looking into all of the different funding options for his business -- he was introduced to Barbara Arena of Granite State Development Corporation through a banking relationship.  During this period of shopping around, he learned that banks were not very interested in lending to the restaurant industry because of the higher risk involved -- and tend to look for credit enhancements from borrowers in order to consider a deal.

“Financing restaurants is not easy,” admits Ralph, “I couldn’t have gotten the terms and the money that I needed to really put myself in the situation that I wanted.  Either the term was too short or the interest rate was too high – I couldn’t pay off other debt I wanted to pay off.”  

Because of the SBA Certified Development Corporation, Granite State – Ralph learned about the 20-year term and historically-low, fixed interest rates available through an SBA 504 Loan.  Because of the bank’s first lien position in a 504 deal and lengthier terms to pay back -- risk has been mitigated for the bank and the SBA enhancements get them comfortable enough to approve the loan.


As a busy entrepreneur, Ralph was most impressed with the easy process.  “Barbara does all the work, I didn’t really do anything,” says Ralph, “she puts everything together – and we saved a TON of money.”

Mr. Constantine was willing to wait for the SBA 504 Refinance Program because it allowed him the best of both worlds.  He wanted to reduce his short-term debts and reduce his monthly debt service ratio – and only the SBA 504 Refinance Program allowed him a way to do that. 

When Mr. Constantine bought Jamie’s back in 2005, he got into a lease with the option to purchase the property after 5 years.  He exercised the purchase option in 2010, and the seller’s note on the property was relatively high at 7% with a 15 year-term.  As a business owner, this presented him with a cash flow dilemma that he had to manage in order to keep expanding his growing portfolio of businesses.

Today, Ralph couldn’t be happier – “IT FEELS GOOD,” says Mr. Constantine.  He reduced his monthly payment/debt service ratio on the deal – saving himself over 7K in monthly cash flow.   He paid off a lot of higher interest rate, short-term debt, and locked in a great interest rate on the bank’s portion of the deal at 4.25% from RADIUS BANK; and 4.5% effective rate on the SBA/CDC portion of the deal.  

His 25% Equity on the property remained his borrower contribution in the refinance project and the structure of the transaction with less risk for the bank and adding in the SBA guarantee allowed him to get a better interest rate than under traditional lending circumstances.  


SBA 504 Refinance Loan Structure


Pie Chart



  • An independent appraisal and environmental inspection is required. 
  • Every 504 deal typically takes 60-90 days to complete.
  • Businesses that qualify for the program have a net worth of less than $15 million.
  • Businesses that qualify for the program have a two-year net income average of less than $5 million
  • Businesses that qualify for the program have a real estate loan for a commercial property that is at least 51 percent owner-occupied.
  • The current loan must be at least 2 years old and must have remained current on payments for at least 12 months.
  • The business and current ownership must also have been in place for at least two years.
  • Maximum Loan to Value ratio is 90% and 85% if the cash out option is exercised.


For more information about the 504 Debt Refinance Program contact Massachusetts SBA Lender Relations Specialists: Ili Spahiu ( or Carlos Hernandez ( 



Bay Colony Economic Development

CDC New England

Coastal Community Capital

Granite State Economic Development Corporation

South Eastern Economic Development Corporation

Worcester Business Development Corporation