SBA alters loan refinance terms - Sacramento Business Journal:

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The changes were authorized in the Americanm Recovery and Reinvestment Actof 2009. The 504 loan progranm is administered through 271 Certifierd Development Companies acrossthe nation. On SBA began implementing the changeds by publishing them as a permanent rule in theFederakl Register. The legislation allows 504 program projectsd to include a limited amount of debt refinancinvg if there is a business expansion and the debt refinancedx does not exceed 50 percent of the projectesdexpansion cost.
The following are some condition under which borrowers will be eligiblsefor refinancing: • The debt being refinanced was incurred to acquirse land, to construct a building or to purchasde equipment. The assets acquired must be eligible for financiny under the504 program. • The existing debt is collateralize d byfixed assets. • The existing debt was incurrefd for the benefit of thesmall business.
The new financing provides a substantial benefit to the borrowere whenprepayment penalties, financing and other financing costs are taken into • The borrower has been current on all payments of existing debt for one year priodr to the date of “Lower interest rates mean lowee payments and less money going out the door each month in debt That means more cash on hand to keep theire doors open, their employees workingt and to even expand and create more jobs,” SBA Administratord Karen Mills said.
The permanent changes alloww small businesses to restructure eligible debt to help improvr their cashflow which, in turn, will enhancw their viability and support growth and job The 504 loan program can be used to purchasew business real estate or fixed assets, such as heavyh equipment or machinery, and expandf current development projects. Mills said the 504 program’s refinancinfg changes are the latest in several Recoveryy Act provisions implemented by the SBA inreceny weeks. On March 16, the agency temporarilyy raised to 90 percent the guarantee level on many ofits 7(a) programm loans and reduced fees on both 7(a) and 504 loans.
Itt also doubled to $5 million the sureth bond guarantee level for smalll businesses competing for construction and servicwe contracts. Additionally, on June 15, SBA’s American Recoveryh Capital loans became available for small businesses facing immediatwefinancial hardship.