Small Businesses Can Get Refinancing Help

I've gotten a lot of questions about the new SBA 504 refinancing program. The original SBA program, which let businesses purchases buildings and some equipment with as little as 10% down, was hugely popular. So it's probably not unexpected that the new refinancing program has gotten a lot of interest from the business community.

I touched on this a bit in my opening blog, but I wanted to take a bit more time to explain exactly what the SBA 504 refinance is - and how it might be able to help your business.

The SBA 504 program makes it easier, not harder, to get mortgage loan refinancing.

The U.S. Small Business Administration has announced the program for business owners who own their building. Designed to help small businesses stay healthy, the temporary refinancing program is focused on businesses whose mortgage is schedule to mature by December 31, 2012. Update: The Small Business Administration has just announced new guidelines expanding the program, meaning business loans maturing after Dec. 2012 are still eligibile! More details coming soon.

The reasons to participate are much the same as you would decide to refinance your home: a lower interest rate, lower monthly payment, extending the repayment period on your loan or borrowing up to 90 percent of the market value of your building.

While the new SBA refinancing program is modeled after the traditional SBA 504 loan, it does not require building expansion and job creation as part of the loan conditions.

SBA 504 loans are a cooperative effort, combining a minimum of 10 percent equity from the business owner, 50 percent from a third-party lender and up to 40 percent from an SBA-approved Certified Development Company.

The minimum 10% contribution by the small business owner to purchase or preserve ownership in a commercial property enables them to preserve their cash for the operating company’s working capital needs.   In addition, the long term value of the 504 programs is:  the small business owner stabilizes its facility expense long term, there is an improvement in cash flow, and equity in the commercial building is created over time.

This new financing opportunity could give a well-deserved break to more than 1,500 businesses in South Puget Sound. The SBA expects the program to benefit as many as 20,000 businesses across the country.

After more than 20 years of working with SBA programs, I can tell you this new refinancing program is worth consideration by small business owners – it’s unlike any program that SBA has offered to date. And interested businesses should act quickly. Authorized under the Small Business Jobs Act, loans must be approved by Sept. 27, 2012.

SBA Administrator Karen Mills said the temporary program “is another tool SBA can provide to help small businesses remain viable and protect jobs.” She said the economy continues to challenge businesses; even those doing well and making on-time mortgage payments have had difficulties refinancing their mortgage debt.

SBA’s traditional 504 loan program is a long-term financing tool, designed to encourage economic development within a community. A 504 loan provides small businesses with long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization.

This new 504 program doesn’t require business expansion, a real boost for local businesses in this economy.

I encourage small business owners with mortgages due at the end of 2012 to contact me and the loan officers at Harborstone for more information. Harborstone became a full-service SBA lender in January. We are pleased to offer this new SBA 504 loan program.

Janie Sacco is a loan officer and SBA expert with Harborstone Credit Union.

Introducing The New SBA 504 Refinance Loan

As a vital business in South Puget Sound, you deserve a break in some really challenging times. And now you might be able to catch that break on your business loan with the new SBA 504 loan refinance program offered through Harborstone Credit Union and the U.S. Small Business Administration.

The SBA announced an unprecedented new loan program last week that is available on existing debt for a business’s owner-occupied commercial property. This could be a great opportunity if your loan matures before Dec. 31, 2012. Update: The Small Business Administration has just announced new guidelines expanding the program, meaning business loans maturing after Dec. 2012 are still eligibile! More details coming soon. And, unlike regular SBA 504 loans, the new program does not require a business expansion plan as part of the loan conditions.

My name is Janie Sacco, and I’ve been fitting small businesses with SBA solutions since 1988. Along with the other loan officers here at Harborstone, I am ready to help you take advantage of the new SBA refinancing program — or help you find an option that fits your needs.

After more than 20 years of working with SBA programs, I can tell you this new refinancing program is worth your consideration. It’s unlike any program that SBA has offered to date. You may be able to borrow up to 90% of the market value of your building, lower your interest rate, and lower your monthly payment.