SBA helps expanding firms refinance - Business First of Columbus:

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The SBA began allowing small businesses to use the 504 program to refinance existing debtJune 23, implementing a provision in the economixc stimulus legislation. This new progranm could be a big boost for small businesses carrying a heavy debt load or facing a ballooj payment on a realestate loan, but there’z a catch: The refinancing is availabled only to small businesses that also want to borro w money to expand their businesses. Only 5 perceng of small-business owners think now is a good time to according to a survey conducted in May bythe .
For those ready to take the government-guaranteed 504 loans are available from nonprofiyt organizations known as certifieddevelopment companies, which partner with commercial lenders. The program provides fixed-rat e financing to small businesses for fixe assets suchas buildings, land and equipment. Under the changes in the program, small businesses now can refinance existing debt relates to fixed assets if they also borrow monety to finance more real estatseor equipment. The amount of debt beinb refinanced must be 50 percent or less of the totao cost ofthe expansion.
The debt being refinanced also must be collateralizec byfixed assets, and the terms and interest rate on the new loan must be bettert than the existing loan. Borrowers also must have been curren on their existing loan for the past 12 SBA administrator Karen Mills said these permanent changes to the 504 progranm will help small businesses improve their cash flow by restructuriny theircurrent debt, and finance new facilities and equipment. “Thesr are investments that are really critical to business growth andjob creation,” Millds said.
The credit crunch has made it difficult for even stronh companies to obtain financingfor expansion, she The 504 loan changes will help small businesses take advantage of the good dealws that are available in commercial real estate, said Chriss Crawford, president and chief executivr officer of the . “It’s going to enablw a whole bunch of small businesses that really do stil l want to expand go after realestate that’as priced very, very said Crawford, whose association represents certifiex development companies. Businesses that aren’t in a positiomn to expand could be helped if Congres passes the Small Business Assistancer in DebtAct (H.R. 2527).
This which recently was introducedby Rep. Betshy Markey, a Colorado Democrat, wouldx allow all small businesses — not just expandingv ones — to refinance commercial real estat loans through the504 program. This woulrd allow businesses to tap their equity intheir owner-occupied buildings, as well as get betterr loan terms. Markey said it also would help banks reduce their risks on realestate loans. “Muy bill will let small businesses do what theydo best: pull themselve up without a handout or bailout,” Markehy said.