SBA FINAL REGULATIONS ON TEMPORARY DEBT REFINANCING
Great News: SBA 504 Debt
Refinancing Program Improved!
Amount of bank or credit union participation is no longer limited to 50% of a current appraisal. It can now follow the regular "504" structure;
Amount to be refinanced is no longer limited to total debt to be refinanced. Reasonable business expenses can be included up to 90% of current appraised value;
Eligible business expenses may include rent, utilities, salaries, inventory or a line of credit which can be substantiated by bank statements, cleared checks or paid invoices. (Incurred prior to refinancing or up to 18 months afterwards);
Debt to be refinanced may qualify if the original loan financed at least 85% of eligible "504" fixed asset costs.
Current commercial loan is eligible if it is the most recent refinancing of the original loan.
The loan must be "current", no payments more than 30 days past due on original or modified payments including deferments (modifications by 10/12/11);
Escrow account is no longer required for same institution debt;
Business has to occupy at least 51% of an existing building at time of refinancing.
The following still apply:
Federally assisted loans such as SBA 504 and SBA 7A are not eligible.
The commercial debt to be refinanced must have been incurred at least 2 years prior to date of application for the refinancing;
The project refinancing is still based on appraised value, but the bank is no longer limited to 50% of appraised value;
Expansion projects are not eligible as part of the refinancing;
All "504" refinancing authorizations have a deadline of September 27, 2012;
The small business must have been in operation for at least 2 years prior to the date of application;
The debt to be refinanced must have been secured by the "504" eligible assets, and they must be collateral for the "504" loan;
Job creation /retention requirements have to be met.
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