Can A Balloon Payment Be Refinanced?

Many small business owners are drawn to loans that have short terms and reasonable monthly payments, only to find that these loans are not fully amortized and will result in a balloon payment. These unexpectedly large final bills can throw a wrench in your financial plans and leave you wondering how to pay it off. The good news is, there are refinancing options available to you if you are a small business owner who wants to break up that final payment into smaller, more manageable chunks.

What Is A Balloon Payment And Why Should You Consider Refinancing?

A balloon payment is a sizable bill that will come due at the end of certain short-term commercial loans that aren’t fully amortized. This allows for low payments throughout the life of the loan, but then accumulates or “balloons” into a considerable final sum. Small business owners who have been making manageable repayments over the course of five or six years could suddenly end up with a sudden and very large last payment. To avoid this, refinancing is a good option.

Refinancing a balloon payment can allow you to amortize the entire balloon payment over the life of a new loan. This will extend the amount over a longer period of time, allowing you to better optimize your monthly cash flow. As a small business owner, refinancing your balloon payment can allow you to put more money into the immediate needs of your business.

Why Refinance with a 504 Loan?

An ideal option for refinancing a balloon payment would be applying for a 504 loan, which are fully amortized and geared specifically toward small business owners. The 504 loan is administered by a Certified Development Company (CDC), and loans are granted in conjunction with a conventional lender that provides 50% or more of the total. Once you choose your CDC, they will facilitate the SBA loan for up to 40%, or $5 million ($5.5 million for manufacturing projects), at a fixed rate, typically below the current market rate.

You can also use a 504 loan to:

  • Purchase land or buildings
  • Build, renovate, or upgrade buildings
  • Purchase equipment with a service life of ten years or more

How can a CDC Help You?

A CDC works in conjunction with conventional financial institutions to provide financing or refinancing options for your small business. Through an in depth understanding of commercial lending and the Small Business Administration,, a CDC like TMC Financing can help you navigate the process of refinancing your balloon payment with a 504 loan. They will help you prequalify, apply, and advise you throughout the entire process from start to close.

You can find out more about refinancing your balloon payment from one of TMC Financing’s 504 loan experts. TMC is an SBA Premier Certified Lender and a high-volume loan provider. With over 35 years of experience, TMC can help you find the financing that is best for you and guide you through the 504 loan process. Contact TMC Financing today.


Barbara Morrison, a local small business advocate and civic leader, founded her first company TMC Financing in 1981. TMC is a Certified Development Company that provides commercial real estate financing to small business owners via the SBA 504 Loan Program. TMC consistently ranks among the top certified development companies nationwide, and has funded projects worth more than $9 billion across California and Nevada. Nearly 5,000 small businesses have benefitted from this financing, resulting in the creation of an estimated 50,000 jobs. TMC is also the No.1 SBA 504 hotel lender in the United States. Barbara is also the founder of Working Solutions, a Bay Area microlender whose mission is to provide micro entrepreneurs, particularly low-income individuals, women and minorities, with the access to capital and resources they need to start a successful business.
Barbara Morrison