The U.S. Small Business Administration (SBA) is removing a deadline on a small business loan program, opening debt refinancing opportunities for thousands of additional companies across the U.S.
Small business owners with eligible commercial real estate mortgages maturing before or after Dec. 31, 2012, will be able to secure more stable, long-term financing through the SBA’s temporary 504 refinancing program, according to a news release from the Indiana Statewide Certified Development Corp. Previously, loan maturities and balloon payments must have come due by Dec. 31, 2012.
The earlier date excluded many small businesses from using the refinance program that was authorized by Congress and signed into law by President Obama as part of the 2010 Jobs Act. The change extending the deadline will be published in the Federal Register by April 6.
The refinancing program is temporary, but has the potential to assist thousands of American small businesses that need to refinance existing debt on real estate, buildings and equipment. The SBA is authorized to guarantee $7.5 billion in refinancing loans before Sept. 30 of this year. Another $7.5 billion is available to support loans applied for by Sept. 30, 2012.
Jean Wojtowicz, chairman of the National Association of Certified Development Corporation (NADCO), says, “The refinancing provision was made possible because of the strong case NADCO made that identified the amount of debt coming due in the near term that would likely have a difficult or impossible time finding a lender to step in. These are unprecedented times, with credit markets tight and only now beginning to loosen. We have saved countless businesses due to this provision that we fought so hard for.”
Wojtowicz also says, “We all know that the SBA 504 program creates great bang for the buck. It generates $94 for every $1 in program cost: $37 to the federal government and $57 in state and local revenues!”
Click here to view March 2011 funding rates for 10-year and 20-year debentures.
Congress created the SBA 504 program to help small businesses receive favorable financing terms and retain operating capital while expanding.
Wojtowicz says that the Indiana Statewide CDC has provided more than $408 million to 938 Indiana companies, creating 26,500 jobs, since 1983.