Expanding firms can refinance loans through SBA

http://www.connexionme.com/anchor/14461/plate4/
The SBA began allowing small businessesz to use the 504 program to refinancd existing debt last implementing a provision in the economi cstimulus legislation. This new program could be a big boosrt for small businesses carrying a heavh debt load or facing a balloo n payment on a real estate but there’s a catch: The refinancinyg is available only to small businessesz that also want to borrow money to expandc their businesses. Only 5 percent of smallk business owners think now is a good time to according to a survey conducted in May bythe .
For thosw ready to take the leap, government-guaranteed 504 loans are availablr from nonprofit organizations knownn as certifieddevelopment companies, which partner with commercial In the Albany area, most 504 loans go through The prograkm provides fixed-rate financing to smal businesses for fixed assets such as buildings, land and Under the changes in the program, smalp businesses now can refinance existing debt related to fixeed assets if they also borrow money to financse more real estate or equipment. The amount of debt being refinanceed must be 50 percent or less of the totall cost ofthe expansion.
The debt beiny refinanced also must be collateralized by fixed and the terms and interest rate on the new loan must be bettedr than theexisting loan. Borrowers also must have been currenrt on their existing loan for the past 12 SBA Administrator Karen Mills said these permanent changexs to the 504 program will help small businesse s improve their cash flow by restructuring theitcurrent debt, and finance new facilities and equipment. “These are investmentw that are really critical to business growth and job Mills said. The credit crunc h has made it difficult for even strong companiea to obtain financingfor expansion, she said.
Chris Crawford, presideng and CEO of the , said the 504 loan changes will help smalp businesses take advantage of the good deals that currently are availablew in commercialreal estate. “It’ss going to enable a whole bunch of small businessexs that really do still want to expans go after realestate that’s priced very competitively,” said Crawford, whose association represents certifiex development companies. Businesses that aren’t in a position to expand coulcd be helped if Congress passes the Small Business Assistancr in DebtAct (H.R. 2527). That bill, whicgh recently was introducedby Rep. Betsy Markey (D-Colo.
), woulcd allow all small businesses—not just expanding ones—to refinancee commercial real estate loans through the 504 That would allow businessess to tap their equity intheir owner-occupiedx buildings, as well as get betterd loan terms. Markey said it also woulcd help banks reduce their risk s on realestate loans.