SBA Eliminates Date Restriction for 504 Refinance Program

Tuesday, March 29, 2011 -- Small business owners with eligible commercial real estate mortgages maturing after Dec. 31, 2012, will be able to secure more stable, long-term financing through the Small Business Administration's (SBA) temporary 504 refinancing program as a result of a change that will be published in The Federal Register by April 6. In February the SBA implemented a temporary refinancing program enacted under the Small Business Jobs Act of 2010, which allowed small businesses facing maturing commercial real estate mortgages or balloon payments before Dec. 31, 2012, to refinance with an SBA 504 loan. The SBA change will lift the date limitation and will allow more small businesses to secure stable, long-term financing and avoid potential foreclosure on mortgages approved before and during the recession that were based on inflated real estate values. With publication in The Federal Register, which is expected by April 6, the SBA will begin accepting applications from small business owners with mortgages maturing after Dec. 31, 2012. The 504 refinancing program will be in effect through Sept. 27, 2012. Refi Program Guidelines: * Borrowers are able to refinance up to 90% of the current appraised property value or 100% of the outstanding mortgage, whichever is lower, plus eligible refinancing costs. * Loan proceeds may not be used for other business expenses. Existing 504 projects and government-guaranteed loans are not eligible to be refinanced. * To be eligible a business must have been in operation for at least two years; the debt to be refinanced must be for owner-occupied real estate and have been incurred no less than two years prior to the date of application; and the proceeds used for 504-eligible business expenses, and payments on that debt must be current for the last 12 months. * Total of first and second mortgages on refinance will be 90% and structured as follows: third party lender 50%; FFCFC/SBA 40%; and borrower 10% equity injection. * In addition to a cash contribution, the borrower's 10% contribution may be satisfied by its equity in the eligible fixed asset (the 504 project) serving as collateral for the refinancing project or by the equity in any other fixed assets that are acceptable to the SBA as collateral. * The refi program does not provide for any cash out. For more information, contact a Florida First Capital Loan Officer listed below, email us at or call us at 888-320.5504.