SBA alters loan refinance terms - Business First of Buffalo:

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The changes were authorized in the American Recoveru and Reinvestment Actof 2009. The 504 loan program is administererd through 271 Certified Development Companies across the On Wednesday, SBA began implementing the changes by publishiny them as a permanent rule in the Federap Register. The legislation allows 504 program projectsz to include a limited amount of debt refinancing if there is a businesws expansion and the debt refinancedd does not exceed 50 percent of the projecterexpansion cost.
The following are some conditionsz under which borrowers will be eligibleefor refinancing: • The debt being refinancede was incurred to acquire land, to construcf a building or to purchasde equipment. The assets acquiredd must be eligible for financing undert the504 program. • The existing debt is collateralizer byfixed assets. • The existing debt was incurred for the benefitt of thesmall business. • The new financing providew a substantial benefit to the borrower whenprepayment penalties, financinyg fees, and other financing costs are taken into • The borrower has been currentg on all payments of existing debt for one year priord to the date of refinancing.
“Lower interest ratesz mean lower payments and less money going out the door each monthu indebt repayments. That meanxs more cash on hand to keep theirdoora open, their employees working and to even expand and creats more jobs,” said SBA Administrator Karen Mills. The permanent changes allow smallp businesses to restructure eligible debt to help improve thei r cashflow which, in turn, will enhanc e their viability and support growth and job creation. The 504 loan prograjm can be used to purchase businessd real estate orfixed assets, such as heavy equipmentg or machinery, and expand current developmenft projects.
Mills said the 504 program’s refinancinfg changes are the latest in several Recoverg Act provisions implemented by the SBA in recent OnMarch 16, the agency temporarilty raised to 90 percent the guarantee levekl on many of its 7(a) program loans and reduced fees on both 7(a) and 504 loans.Itr also doubled to $5 million the surety bond guarantee level for small businessesz competing for construction and service contracts. Additionally, on June 15, SBA’w American Recovery Capital loans became available for small businesses facing immediatefinancial hardship.