SBA alters loan refinance terms - Business First of Buffalo:

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The changes were authorized in the American Recovery and Reinvestmeny Actof 2009. The 504 loan program is administered through 271 Certified Development Companiea acrossthe nation. On SBA began implementing the changes by publishingv them as a permanent rule in theFederalp Register. The legislation allows 504 program projectxs to include a limited amount of debt refinancing if therer is a business expansion and the debt refinanced does not exceedd 50 percent of the projected expansion The following are some conditions under which borrowers will be eligiblwfor refinancing: • The debt beinb refinanced was incurred to acquire to construct a building or to purchasde equipment.
The assets acquired must be eligibls for financing under the504 program. The existing debt is collateralized byfixed assets. The existing debt was incurred for the benefir of thesmall business. • The new financinvg provides a substantial benefit to the borrower whenprepayment penalties, financing fees, and other financing costs are take into account. • The borrower has been currengt on all payments of existinfg debt for one year prioe to the dateof “Lower interest rates mean lower payments and less money going out the door each montyh in debt repayments.
That meanz more cash on hand to keep theitrdoors open, their employee working and to even expand and creatr more jobs,” said SBA Administrator Karejn Mills. The permanent changes allows small businesses to restructurre eligible debt to help improver their cashflow which, in turn, will enhance their viabilityt and support growth and job The 504 loan program can be used to purchaser business real estate or fixed assets, such as heavg equipment or machinery, and expand current development projects. Milla said the 504 program’s refinancing changes are the latestg in several Recovery Act provisions implemented by the SBA inrecenty weeks.
On March 16, the agency temporarilyt raised to 90 percent the guarantee level on many ofits 7(a) progran loans and reduced fees on both 7(a) and 504 loans.Itt also doubled to $5 millionn the surety bond guarantee level for smalp businesses competing for construction and service contracts. on June 15, SBA’s American Recovery Capitapl loans became available for small businesses facingh immediatefinancial hardship.