The 504 loan program is temporarily extended so as to enable refinancing of existing commercial real estate debt. Regulations associated with the SBA 504 Debt Refinance Program have been outlined in Small Business Jobs Act 2010. Market research reveals large percentage of commercial mortgage outstanding is set to mature in next few years time.
Barbara Morrison, chief executive officer of TMC Development, says “There is no doubt there is need for this program.” The SBA is currently implementing this program under the Jobs Act that will enable small businesses refinance fixed assets in its 504 program without the need of expansion. This program will bring opportunity to small businesses to receive stable finance and create long term jobs. Then Micro Loans for Small Business can also become possible.
Loan applications will be accepted from Feb 27 and the program will end on 27th Sept, 2012. Morrison also reiterates, “It is very difficult to know exactly what the demand is going to be.” Loan applications will be provided to borrowers who really are in need and whose loans would become due on Dec. 31, 2012.
According to the new SBA regulations, mortgage rates can be lowered and 90 percent of the asking amount can be lent out. The borrowers can finance up-to 90 percent of recent appraised property value or 100 percent of outstanding principal. Initially SBA will open the program to businesses that are in immediate need. Priority will be given to businesses that are at risk and are in the verge of loan maturity.
This program is similarly structured like the SBA’s traditional 504 loan program. Borrowers will have to work out loan approvals by involving third party lending institutions and SBA-approved Certified Development Companies. SBA, however, estimates that around 20,000 businesses may participate in this program. This will help generate $15 billion in SBA-guaranteed financing that would generate over $30 billion of project financing.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to