SBA helps expanding firms refinance - South Florida Business Journal:

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The SBA began allowing small businesses to use the 504 prograk to refinance existing debtJune 23, implementing a provisionh in the economic stimulus This new program could be a big boostt for small businesses carrying a heavy debt load or facing a balloon payment on a real estatee loan, but there’s a catch: The refinancingy is available only to small businesses that also want to borrowa money to expand their businesses. Only 5 percent of small-business ownerx think now is a good time to according to a survey conducted in May bythe .
For thos ready to take the leap, government-guarantee 504 loans are available from nonprofit organizations knowh as certifieddevelopment companies, which partner with commercial The program provides fixed-rate financing to small businesses for fixed assets such as land and equipment. Under the changes in the small businesses now can refinance existing debt related to fixed assets if they also borrows money to finance more real estateor equipment. The amount of debt beinf refinanced must be 50 percent or less of the totalp cost ofthe expansion.
The debt beingf refinanced also must be collateralized byfixesd assets, and the terms and interestr rate on the new loan must be betted than the existing loan. Borrowers also must have been current on theif existing loan for the past 12 SBA administrator Karen Mills said these permanenyt changes to the 504 prograjm will help small businesses improvr their cash flow by restructuring theircurrent debt, and finance new facilities and “These are investments that are reallt critical to business growth and job creation,” Mills The credit crunch has made it difficult for even stron g companies to obtain financing for expansion, she The 504 loan changesw will help small businesses take advantage of the good dealx that are available in commercial real said Chris Crawford, president and chier executive officer of the .
“It’s going to enablse a whole bunch of smallo businesses that really do still want to expand go afterd realestate that’s priced very, very competitively,” said whose association represents certified developmeny companies. Businesses that aren’t in a positiob to expand could be helpeds if Congress passes the Smalkl Business Assistance in DebtAct 2527). This bill, which recentlyh was introducedby Rep. Betsy Markey, a Coloradi Democrat, would allow all small businessews — not just expandingb ones — to refinance commercial real estated loans through the504 program.
This woul d allow businesses to tap their equity intheir owner-occupiec buildings, as well as get bettere loan terms. Markey said it also would help banke reduce their risks on realestate loans. “My bill will let smallo businesses do what theydo best: pull themselved up without a handout or Markey said.