# How does the 90% loan-to-value limit work on a 504 refinance?

**Short answer:** Qualified Debt can be refinanced under 13 CFR 120.882(g), up to 90% loan to value on a project that refinances only Qualified Debt. If your debt exceeds that, you add cash or fixed-asset collateral SBA accepts. Source: SOP 50 10 8.1, Sec. C, Ch. 1, Para. C.10.

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Last checked: 2026-11-08

Qualified Debt can be refinanced under 13 CFR 120.882(g), up to 90% loan to value on a project that refinances only Qualified Debt. Source: SOP 50 10 8.1, Sec. C, Ch. 1, Para. C.10 (Para. C begins p. 226). The test compares the debt to appraised value, and your business must have operated for the full two years before you apply.

## What value is used

The Refinancing Project is the fair market value of the fixed assets securing the debt, plus other fixed assets SBA accepts. An independent appraiser sets that value. The appraisal is not required at application. It must be dated within 12 months of approval and done before closing.

## The funding sources

- A third party loan at least as large as the 504 loan.
- A 504 loan of no more than 40%.
- At least 10% from you, or 15% for a limited or special purpose property.

Together, the 504 loan and third party loan cannot exceed 90% of the collateral's fair market value (13 CFR § 120.882(g)(6)).

## When the debt is more than 90% of value

You must add cash or other fixed-asset collateral SBA accepts (Para. C.10). If the project also finances Eligible Business Expenses, you cannot add collateral to raise the value.

## If the new loans fall short of the payoff

The current lender must forgive part of the balance, accept a payment from you, or take a note for the rest. That note must be subordinate to the 504 loan if they share collateral (Para. C.10).

## Lien positions

The third party lender takes a first lien on the eligible fixed assets. The 504 loan takes a second lien (13 CFR § 120.882(g)(8)).

## Sources

- [SOP 50 10 8.1, Sec. C, Ch. 1, Para. C.10 (Para. C begins p. 226)](https://legacy.sba.gov/sites/default/files/2026-10/SOP%2050%2010%208.1%20Technical%20Policy%20Updates%20effective%20%2010.1.2026.docx)
- [13 CFR § 120.882(g)](https://www.ecfr.gov/current/title-13/section-120.882)