SBA approves 504 loans for refinancing commercial real estate

For the first time, the U.S. Small Business Administration is allowing for the temporary extension of the 504 loan program to allow refinancing of existing commercial real estate debt.

The administration released regulations regarding the SBA 504 Debt Refinance Program outlined in the Small Business Jobs Act of 2010.  Because market research shows that a large percentage of commercial mortgages outstanding are set to mature within the next few years, particularly those held by community banks. As real estate values have declined, however, even small businesses that are performing well and making their payments on time can have a hard time refinancing these loans and may need to restructure their debt.

"There is no doubt there is need for this program," said Barbara Morrison, chief executive officer of TMC Development, a certified SBA development company. "We are getting calls every day from banks asking when we could start this program."

Under the Jobs Act, the SBA is implementing this temporary program through Sept. 27, 2012, which allows small businesses to refinance eligible fixed assets in its 504 program without requirement of an expansion, as is the case with typical 504 loans. The SBA intends this program to provide small businesses the opportunity to lock in long-term, stable financing, as well as protect jobs.

The SBA will start accepting loan applications Feb. 28. The program will end Sept. 27, 2012.

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