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Congress Permanently Reinstates SBA 504 Debt Refinancing Program

Dec 2015

In a major victory for small business borrowers, Congress has approved the return of the Small Business Administration (SBA) 504 Debt Refinancing Program on a permanent basis.

The provision to reinstitute the debt refinance program was part of the omnibus bill that will fund the federal government for the remainder of FY 2016, which Congress approved and President Obama signed into law on Dec. 18.

Congress did add a few additional caveats on debt refinance in exchange for the program's return, according to the National Association of Development Companies (NADCO), which worked tirelessly with its congressional allies and the SBA for reinstatement of the program.

• The program can only be used in years that both standard 504 and the refinance program are at zero subsidy.

• Additionally, a Certified Development Company's 504 portfolio, by dollars, must be at least 50% standard 504 loans. Refinance loans cannot make up a majority of the portfolio. A waiver provision exists if the SBA sees good cause for additional refinance loans to be made.

Please note that the SBA has stated it will take AT LEAST 4-6 MONTHSto be able to restart this new version of the program.

In the meantime, Florida First Capital will provide updates regarding timelines and information about the return of the 504 Debt Refinancing Program as details become available (receive e-alerts).

The 504 Debt Refinancing Program allows small business owners to finance up to 90% of the current appraised property value, plus 504 eligible refinancing costs without the requirement of expansion, which was normally the case with 504 projects involving refinance.

Originally part of the Small Business Jobs Act of 2010, the debt refinancing program did not become fully operational until February 2012, which significantly shortened the period of time that small businesses could use 504 loans to refinance qualifying existing debt before it expired on Sept. 27, 2012.

During that time, more than 2,700 small businesses refinanced nearly $7 billion in old, expensive debt to unleash capital that was reinvested into their businesses to create and retain jobs. The measure literally saved thousands of small businesses in communities across the country during the recession, helping them accelerate the economic recovery.

For more information about SBA 504 loans in Florida,contact a Florida First Capital Loan Officeror email us atinfo@ffcfc.com. Phone: 850.681.3601 or toll-free at 888.320.5504.