Doug Nelson

Do You Qualify For The SBA 504 Refinance Program?

During the 2008 recession, small business owners had to become extremely savvy in their cash management, accounting for each dollar going in and coming out of their organization. New entrepreneurs hanging their shingle for the first time shared the same anxiety that long-term business owners had as they considered the future of their companies.

Thankfully, in 2010, the Small Business Administration temporarily expanded the 504 Loan program to include debt refinancing as part of the Small Business Jobs Act in order to assist small businesses in obtaining capital at a time when commercial lending had ground to a halt.

The debt refinancing program, originally just intended as a two-year temporary measure to stimulate the market, allowed small business owners an opportunity to lower the cost of their long-term fixed real estate debt. The program proved to be incredibly successful, helping more than 2,700 businesses across America refinance nearly $7 billion dollars in high-interest debt.

Unfortunately, the program concluded in 2012 with many small businesses still interested in the initiative.

business-calculating-money.jpgToday, despite the relative recovery of the market, many business owners continue to face the pressure of commercial mortgage debts. Certified Development Companies across the country fought to make SBA 504 debt refinancing a permanent addition to the program for three years.

The large scale effort proved to be successful when the Small Business Administration announced in December 2015 that the 504 Loan Program would be reintroduced in 2016 and would begin taking applications in June 2016 through their network of Certified Development Companies, including the TPRDC.

The SBA 504 Refinance program provides long-term, below-market, fixed-rate financing to small businesses for construction or purchase of real estate, machinery, or equipment. Some key points of the program include:

  • Small business owners may borrow up to 90% of the value of a property.
  • Project financing for real estate for up to 20 years.
  • Project financing for capital equipment for up to 10 years.
  • Private lender financing accounts for only 50% of the loan.
  • The Small Business Administration, through its network of Certified Development Companies, such as the TPRDC, provide the remaining 50% of the project financing through a fixed-rate loan.

SBA Administrator Maria Contreras-Sweet said in regards to the program being made permanent: “The 504 loan program with its long term fixed-rate can help refinance debt from adjustable rate loans with significant savings to borrowers. Paying off existing loans with a new loan at a lower cost can help increase cash flow, which can be especially helpful in a resurgent economy.”  

Could your business benefit from the SBA 504 Refinance Program? For more information, please click here or feel free to call TPRDC at (806) 331-6172.