Debt Refinancing

Small Business Jobs Act leads to temporary extension of 504 program to allow for commercial real estate debt refinancing.

Need your owner-occupied building refinanced?  In order to help those small businesses most in need of assistance, the SBA 504 loan program has been temporarily extended to small businesses facing maturity of commercial mortgage balloon notes to refinance their debt.  PHASE I of this program is aimed at helping these small businesses remain viable and protect jobs, while also helping to stabilize commercial real estate values.  Loan applications will be accepted from February 28, 2011 - September 27, 2012. 

Program Features

• Borrowers can refinance up to 90% of the current appraised property value or 100% of the outstanding mortgage, whichever is lower. This can include eligible business expenses, like paying off (or paying down)existing lines of credit
• Program is structured like the traditional SBA 504 loan program -- 50% by the Third Party Lender, 40% by a Certified Development Company, and 10% by the borrower.
• The borrower may be able to rely on existing equity in their real estate to serve as their contribution to the project
• Debt may be refinanced even if it does not meet the job creation or other economic development objectives of traditional SBA 504 loans

The Third Party loan and the 504 loan combined may not be more than 90% of the fair market value of the fixed assets securing the loan. An independent appraisal of the fair market value of the assets offered as collateral is needed.

Eligibility

• For small businesses that have a mortgage with a balloon payment maturing (please note - the SBA lifted the maturity date restriction and it will be in effect on or before April 6, 2011.) 
• Loans must have been current for the past year with no payment being deferred or past due for more than 30 days
• Debt must have been incurred not less than two years prior to the date the application is received
• Small business must have been in business for two years prior to the submission of the application