SBA helps expanding firms refinance - South Florida Business Journal:

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The SBA began allowinh small businesses to use the 504 program to refinancde existing debtJune 23, implementing a provision in the economic stimulus legislation. This new prograkm could be a big boos t for small businesses carrying a heavu debt load or facing a ballooj payment on a real estate but there’s a catch: The refinancing is availablw only to small businesses that also want to borrow mone to expand their Only 5 percent of small-business ownerw think now is a good time to according to a survey conducted in May by the .
For thoses ready to take the leap, government-guaranteedr 504 loans are available from nonprofit organizations knownb as certifieddevelopment companies, which partner with commerciaol lenders. The program provides fixed-rate financing to small businesses for fixed assets such as landand equipment. Under the changew in the program, small businesses now can refinancre existing debt related to fixed assetse if they also borrow money to finance more real estatreor equipment. The amount of debt being refinancer must be 50 percenft or less of the total cost ofthe expansion.
The debt bein g refinanced also must be collateralized byfixefd assets, and the terms and interest rate on the new loan must be better than the existinhg loan. Borrowers also must have been curren on their existing loan for the past12 months. SBA administratort Karen Mills said these permanent changes to the 504 prograk will help small businesses improve their cash flow by restructuringg theircurrent debt, and financ e new facilities and equipment. “These are investments that are reallgy critical to business growth andjob creation,” Mills said. The credigt crunch has made it difficult for even strongh companies to obtain financing for she said.
The 504 loan changes will help smalll businesses take advantage of the good dealsd that are available in commercial real saidChris Crawford, presidenft and chief executive officer of the . “It’z going to enable a whole bunch of smalkl businesses that really do stil want to expand go after realestate that’zs priced very, very competitively,” said Crawford, whose association representas certified development companies. Businesseds that aren’t in a position to expand could be helpedr if Congress passes the Smallp Business Assistance in DebtAct 2527). This bill, which recently was introducedby Rep.
Betsy Markey, a Coloradi Democrat, would allow all small businesses — not just expandiny ones — to refinance commercial real estates loans through the504 program. This would allow businesses to tap their equity intheid owner-occupied buildings, as well as get better loan terms. Markeg said it also would help banks reduce theirt risks on realestate loans. “My bill will let smalo businesses do what theydo best: pull themselves up without a handouft or bailout,” Markey said.