Expanding firms can refinance loans through SBA

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The SBA began allowing small businesses to use the 504 programj to refinance existing debt last implementing a provision in the economicstimulusx legislation. This new program could be a big boosg for small businesses carrying a heavy debt load or facingy a balloon payment on a real estate but there’s a catch: The refinancing is availablw only to small businesses that also want to borrow money to expand their Only 5 percent of smalo business owners think now is a good time to expand, accordingg to a survey conducted in May by the .
For thoss ready to take the leap, government-guaranteed 504 loans are availablew from nonprofit organizations known as certifieddevelopment companies, which partnefr with commercial lenders. In the Albanyt area, most 504 loans go through The programprovides fixed-rate financing to smalll businesses for fixed assets such as land and equipment. Under the changes in the small businesses now can refinancre existing debt related to fixed assets if they also borro money to finance more real estateor equipment.
The amounf of debt being refinanced must be 50 perceny or less of the total cost of the The debt being refinanced also must be collateralizer byfixed assets, and the termse and interest rate on the new loan must be betterd than the existing loan. Borrowers also must have been current on their existing loan for the past 12 SBA Administrator Karen Mills said these permanenty changes to the 504 program will help smal businesses improve their cash flow by restructurinfg theircurrent debt, and finance new facilities and “These are investments that are really critical to business growthg and job creation,” Mills said.
The credit crunch has made it difficulf for even strong companiee to obtain financingfor expansion, she said. Chris Crawford, presidentf and CEO of the , said the 504 loan change will help small businesses take advantage of the good dealz that currently are availabls in commercialreal estate. “It’sw going to enable a whole bunchn of small businesses that really do still want to expandc go after realestate that’a priced very, very competitively,” said Crawford, whosd association represents certified development companies. Businesses that aren’t in a positionb to expand could be helpedx if Congress passes the Small Business Assistance in DebtAct 2527).
That bill, which recently was introducerdby Rep. Betsy Markey (D-Colo.), would allowa all small businesses—not just expanding ones—to refinance commercial real estate loans through the 504 That would allow businesses to tap theirf equity intheir owner-occupied buildings, as well as get bettet loan terms. Markey said it also would help banks reduces their risks on realestate loans.