More small businesses have a chance to refinance their mortgage debt, thanks to an extension of a U.S. Small Business Administration (SBA) refinancing loan program, offered by the Oakland County Business Finance Corporation (BFC). Small business owners with eligible commercial real estate mortgages maturing both before and after Dec. 31, 2012, will be able to secure more stable, long-term financing through the SBA's temporary 504 refinancing program.
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. BFC loan officers can be reached at (248) 858-0765 to determine eligibility or answer any questions.
"I applaud the SBA for opening up this critical assistance to more small businesses," said Oakland County Executive L. Brooks Patterson. "This gives local businesses, both within Oakland County and the surrounding areas, the opportunity to restructure their debt and free up capital that will be essential to keep their doors open and provide them the ability to grow and create jobs."
Structured like the SBA's traditional 504 loan, borrowers must commit at least 10 percent equity and work with third-party lending institutions and SBA-approved Certified Development Companies in the standard 50 percent/40 percent split. The program does not require an expansion of the business to qualify.
Borrowers may be able to refinance up to 90 percent of the current appraised property value or 100 percent 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 at this time.
This is a pilot program. The SBA will begin accepting refinancing applications from small business owners with mortgages maturing after December 31, 2012 after publication of the Federal Register on April 6. The program, authorized under the Small Business Jobs Act, will be in effect until Sept. 27, 2012.
The SBA estimates that as many as 20,000 businesses may ultimately participate in the program which will provide up to $15 billion in SBA-guaranteed financing leading to total project financing of over $30 billion.
The BFC, authorized under the SBA's Certified Development Company program in 1982, was formed to stimulate the growth and expansion of the region's small businesses. The BFC also acts as an agent to analyze, package and submit loan requests under the SBA 504 loan program and is a servicing agent for the approved loans.