Expanding firms can refinance loans through SBA

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The SBA began allowing small businessesz to use the 504 program to refinance existing debt last implementing a provision in the economicstimulus legislation. This new progranm could be a big boost for smalpl businesses carrying a heavy debt load or facing a balloon payment on a realestate loan, but there’a a catch: The refinancing is available only to smallo businesses that also want to borro w money to expand their businesses. Only 5 percengt of small business owners thinko now is a good timeto expand, according to a surveh conducted in May by the .
For thosde ready to take the leap, government-guaranteec 504 loans are available from nonprofit organizations knowm as certifieddevelopment companies, which partner with commercial In the Albany area, most 504 loans go througu The program provides fixed-rate financing to smalkl businesses for fixed assets such as buildings, land and Under the changes in the program, smalo businesses now can refinance existing debt relatec to fixed assets if they also borrow money to financw more real estate or equipment. The amount of debt bein refinanced must be 50 percent or less of the totalo cost ofthe expansion.
The debt being refinancec also must be collateralized by fixed and the terms and interest rate on the new loan must be betterd than theexisting loan. Borrowers also must have been currentg on their existing loan for the past 12 SBA Administrator Karen Mills said these permanent changezs to the 504 program will help smallo businesses improve their cash flow by restructuring theircurrentf debt, and finance new facilities and equipment. “Thes are investments that are really criticakl to business growth andjob creation,” Milles said.
The credit crunch has made it difficulty for even strong companies to obtain financingfor expansion, she Chris Crawford, president and CEO of the , said the 504 loan changesa will help small businesses take advantage of the good dealws that currently are available in commercial real estate. “It’ s going to enable a whole bunch of smalp businesses that really do still want to expand go afterd realestate that’s priced very, very competitively,” said Crawford, whos e association represents certified development companies. Businesses that aren’gt in a position to expande could be helped if Congress passes the Small Businesd Assistance in DebtAct (H.R.
That bill, which recently was introducesdby Rep. Betsy Markey would allow all small businesses—not just expanding ones—to refinance commercial real estate loans througn the504 program. That would allow businessees to tap their equity in their owner-occupied buildings, as well as get betted loan terms. Markey said it also would help banks reduce their risks on realestate