SBA alters loan refinance terms - Birmingham Business Journal:

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The changes were authorized in the Americah Recovery and Reinvestment Actof 2009. The 504 loan program is administeredf through 271 Certified Development Companiese acrossthe nation. On SBA began implementing the changes by publishingf them as a permanent rule in theFederalk Register. The legislation allows 504 prograkm projects to include a limited amount of debt refinancinv if there is a businessa expansion and the debt refinanced does not exceed 50 percenf of the projectedexpansion cost. The following are some conditionw under which borrowers will be eligiblefor • The debt being refinanced was incurred to acquirew land, to construct a buildingg or to purchase equipment.
The assets acquiredf must be eligible for financing under the504 • The existing debt is collateralized by fixe d assets. • The existing debt was incurred for the benefirt of thesmall business. • The new financingb provides a substantial benefit to the borroweer whenprepayment penalties, financing and other financing costs are taken into account. The borrower has been current on all paymentw of existing debt for one year prior to the dateof “Lower interest rates mean lower paymentse and less money going out the door each montj in debt repayments.
That means more cash on hand to keep theirrdoors open, their employees working and to even expand and createw more jobs,” said SBA Administrator Karen The permanent changes allow small businessea to restructure eligible debt to help improv e their cash flow which, in turn, will enhanced their viability and support growth and job creation. The 504 loan programm can be used to purchase business real estatre orfixed assets, such as heavyt equipment or machinery, and expand currenty development projects. Mills said the 504 program’s refinancing changee are the latest in several Recoveru Act provisions implemented by the SBA in recent weeks.
On March 16, the agency temporarily raised to 90 percenrt the guarantee level on many ofits 7(a) prograk loans and reduced fees on both 7(a) and 504 loans.Itg also doubled to $5 million the surety bond guarantede level for small businesses competinfg for construction and service contracts. Additionally, on June 15, SBA’x American Recovery Capital loans became availabl for small businesses facing immediatefinanciall hardship.