How much can I save by converting 7(a) to 504?

With Prime at 7.50%+, a typical 7(a) at Prime + 2.75% costs 10.25%. Converting to a 504 fixed rate at 6.50% saves approximately $37.50 per month per $100,000 of debt, plus the 25-year amortization further reduces monthly payments vs a 10-year 7(a).

Can I take cash out in an SBA 7(a) to 504 refinance?

Yes. SBA 504 refinance allows up to 20% cash-out above the existing debt payoff for eligible business expenses including expansion, renovation, or equipment. The total loan amount (debt payoff plus cash-out) cannot exceed 90% of appraised property value.

What are the closing costs for an SBA 504 refinance?

SBA 504 closing costs include a CDC processing fee (typically 1.5% of the SBA portion), a guarantee fee (0.5% of the SBA portion), third-party reports (appraisal, environmental, title), and legal fees. Total closing costs typically run 3-5% of the SBA debenture amount.

How long does an SBA 7(a) to 504 conversion take?

Typical 504 refinance closings take 60-90 days from application. The process involves coordination between the conventional first mortgage lender and the CDC for the SBA second lien. Faster closings are possible with complete documentation and an experienced SBA lending team.

Published: March 31, 2026·Last updated: May 16, 2026·By Ed Freeman, Capital Advisor — PeerSense

What is the best financing for mixed (owner-occupied cre) at Variable to Fixed LTV?

Businesses with variable-rate SBA 7(a) loans can refinance into SBA 504 fixed-rate financing at approximately 5.75-7.00% for 25-year terms. This conversion eliminates interest rate adjustment risk, reduces monthly payments in most rate environments, and provides long-term payment certainty. Properties must be owner-occupied with at least 51% borrower use.

Published by PeerSense Capital Advisory · Written by Ed Freeman, Founder

Prime: 6.75% 10-Yr Treasury: 4.25% Est. SBA 504 Range: 6.5% – 7.5% (SBA 504 fixed)as of Mar 19, 2026

Mixed (Owner-Occupied CRE)

SBA 7(a) to 504 Refinance

Convert your variable-rate SBA 7(a) loan to a 25-year fixed-rate SBA 504. Lock in 25-year fixed rates typically 6.5%–7.5% and eliminate rate adjustment risk. Available for owner-occupied commercial properties.

Minimum 30-35% equity required. Business owners with existing SBA 7(a) variable-rate loans on owner-occupied commercial real estate who want to lock in a long-term fixed rate and reduce monthly debt service.

Discuss Your Mixed (Owner-Occupied CRE) Deal Call (317) 452-6990

KEY TERMS

Deal Parameters at a Glance

LTV Target

Variable to Fixed

Est. Rate Range

6.5% – 7.5% (SBA 504 fixed)

Term

25 years fixed (real estate) / 10 years (equipment)

Recourse

Full recourse (personal guarantee)

DSCR

1.15x minimum

Closing Speed

60-90 days

Min Loan Size

$250K

Loan Products

SBA 504

FIT ASSESSMENT

When Is This the Right Fit?

This refinance is the right move when your SBA 7(a) variable rate has climbed above your comfort level and you want payment certainty for the next 25 years. Many 7(a) borrowers took loans at Prime + 2.75% when Prime was 3.25%, resulting in a 6.00% all-in rate. With Prime now at 7.50%+, that same loan costs 10.25%+. Converting to a 504 fixed rate at 5.75-7.00% can reduce annual debt service by 20-30%. You must have owned the property for at least 2 years, the property must be owner-occupied (51%+), and your business must be current on all SBA obligations.

Want the full program overview, current rate sheet, and underwriting matrix? See the SBA Loans guide →

ADVANTAGES

Key Benefits

Convert variable rate (currently Prime + 2-3%) to 25-year fixed at 5.75-7.00%

Eliminate interest rate adjustment risk permanently

Reduce monthly payments in most rate environments

25-year amortization lowers annual debt service vs 10-year 7(a) maturity

Cash-out available to fund business expansion or equipment

ALTERNATIVES

Strategic Alternatives

65% LTV Industrial Owner-User Financing

If you are acquiring a new property rather than refinancing existing SBA debt

Learn more

SBA 504 Hotel Owner-Occupied

If your SBA 7(a) is specifically on a hotel property

Learn more

CMBS Balloon Maturity Refinance

If your property is investor-owned (not owner-occupied) and does not qualify for SBA

Learn more

Frequently Asked Questions

Yes. SBA 504 refinance of existing SBA 7(a) debt is an approved use of 504 proceeds. The property must be owner-occupied (51%+), you must have owned it for at least 2 years, and the business must be current on all SBA obligations with no delinquency in the past 12 months.

See Related Rates by Program

PeerSense covers the full commercial capital stack. Rates and structures across our money pages — updated weekly.

CMBS Conduit

5.60–7.10%

10-yr non-recourse fixed, $5M–$500M+, fully assumable

See current rates

Bridge Loans

9.00–14.00%

12–36 mo transitional, SOFR + 470-970 bps, 65-75% LTV

See current rates

DSCR Investor

5.95–8.50%

30-yr fixed rental, qualifies on property cash flow

See current rates

Equipment Financing

5.50–12.00%

Loan, lease, SBA 504, vendor, captive — Section 179 eligible

See current rates

Hotel Financing

5.85–11.75%

CMBS + SBA 504 + bridge + PIP across all flags

See current rates

Mezzanine Debt

11.00–18.00%

Subordinate to senior, $1M–$50M, capital stack fill

See current rates

Private Credit

7.80–18.00%

Non-bank flexibility, unitranche, recap, transitional

See current rates

Invoice Factoring + ABL

0.5–3.5% / 30d

B2B receivables, trucking / staffing / construction / govt

See current rates

No-Doc CRE

7.50–11.50%

Limited-doc commercial, asset-based underwriting

See current rates

Connect with PeerSense — Direct Capital Advisory

PeerSense pre-underwrites every deal before presenting it to our institutional capital sources. With 500+ lender relationships and live market rate intelligence, we match your mixed (owner-occupied cre) deal with the right capital source — right now.

Scan Your Deal (30 sec)Tell Us About Your Deal Call (317) 452-6990

No upfront retainer · Fee at closing only · Complimentary initial consultation

Published by PeerSense Capital Advisory · Written by Ed Freeman, Founder. Updated March 2026.

Disclaimer: The information on this page is provided for educational purposes only and does not constitute financial, legal, or investment advice. Rates, terms, and availability are subject to change based on market conditions, property characteristics, and borrower qualifications. The rate ranges cited reflect approximate market pricing as of March 2026 and may not reflect current conditions at the time of reading. PeerSense is a capital advisory firm, not a lender. We do not originate, fund, or service loans. All financing is provided by third-party lenders subject to their own underwriting criteria and approval processes. Borrowers should consult with qualified financial and legal professionals before making any financing decisions.