SBA alters loan refinance terms - Jacksonville Business Journal:

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The changes were authorized in the American Recovery and Reinvestmentt Actof 2009. The 504 loan programj is administered through 271 Certifie Development Companies across the On Wednesday, SBA began implementing the changesa by publishing them as a permanengt rule in the Federal Register. The legislation allows 504 program projects to include a limited amount of debt refinancing if thers is a business expansion and the debt refinanced does not exceecd 50 percent of the projectedexpansion cost.
The followingg are some conditions under which borrowers will be eligiblwefor refinancing: • The debt being refinanced was incurred to acquirwe land, to construct a buildiny or to purchase equipment. The assets acquire must be eligible for financing under the504 • The existing debt is collateralizede by fixed assets. • The existing debt was incurred for the benefit of thesmall business. • The new financing provideas a substantial benefit to the borrowerr whenprepayment penalties, financing fees, and other financingt costs are taken into account. • The borrower has been currenyt on all payments of existing debt for one year priore to the dateof refinancing.
“Lower interestt rates mean lower paymentws and less money going out the door each month in debt That means more cash on hand to keep theifdoors open, their employees working and to even expand and createe more jobs,” said SBA Administrato r Karen Mills. The permanent changes allow small businesses to restructurew eligible debt to help improve their cash flow in turn, will enhance theirt viability and support growth and job creation. The 504 loan progranm can be used to purchasee business real estate orfixed assets, such as heavyy equipment or machinery, and expand currengt development projects.
Mills said the 504 program’s refinancing changes are the latest in several Recover Act provisions implemented by the SBA inrecentr weeks. On March 16, the agencyg temporarily raised to 90 percent the guarantee level on many ofits 7(a) program loans and reduced fees on both 7(a) and 504 loans.Iyt also doubled to $5 million the surety bond guarantee level for smalp businesses competing for construction and service Additionally, on June 15, SBA’x American Recovery Capital loansx became available for small businessed facing immediate financial hardship.