As of June 24, 2016, the SBA has reinstated a program that offers an advantageous fixed-rate refinancing for businesses refinancing fixed assets. This agency and Certified Development Companies (CDCs), 504 lenders who carry out the loans, have been advocating for the product so that small business owners will be able to refinance their existing debt, and in some cases, include funds for other eligible business expenses. The overarching goal of the refinancing program is to help these small businesses prosper and grow.
An earlier iteration of the program was created on a temporary basis and implemented in response to the 2008 recession. Unfortunately, since the program reached its statutory end date in 2012, it was unavailable despite widespread national demand. Now, however, the program is back, and this time it’s permanent.
What does this program mean for America’s businesses?
The goal of the program is to refinance a small business’s existing debt on fixed assets such as a building or heavy machinery under more favorable terms. The SBA found that, depending on the loans refinanced, some businesses saved as much as $10,000 or $20,000 per month on payments.
How do I find out more about the SBA 504 loan program or refinancing program?
Only SBA-certified lenders are eligible to offer the SBA 504 loan or refinancing program. To find a Certified Development Company, visit sba.gov’s Local Assistance Tool and filter the CDCs by state.
Which small businesses are eligible for the program?
While the program has been officially available as of June 24, 2016, eligibility and other rules have not yet been finalized. The National Association of Development Companies, a trade association for SBA 504 lenders, has been advocating to further broaden the eligibility requirements for SBA 504 refinancing loans so that it is accessible to even more US businesses.
The SBA 504 program (non-refinancing) is an SBA loan program with a highly advantageous fixed-rate due to a government guarantee for the purchase of fixed assets, such as buildings (20-year) or equipment (10-year). The program has existed in its current form since the 1980s. In that time it has supported over $200 billion in loans to U.S. businesses.