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Time Running Out on 504 Temporary Debt Refinancing Program

Mar 2012

The opportunity to refinance commercial debt under the Small Business Administration (SBA) 504 loan program will expire in six short months on Sept. 27 of this year.

The 504 debt refinancing program offered through Florida First Capital allows small businesses to take advantage of long-term, low fixed interest rate loans to refinance their high interest or maturing real estate debt or existing debt on capital assets.

Borrowers also can use excess equity in the asset being refinanced to finance eligible business expenses to support business operations for a period of 18 months under this temporary program.

Why Participate in the 504 Refinancing Program?

Commercial real estate lenders have been watching their loan-to-value ratios increase as appraisals on collateral have declined during the recent recession.

The 504 refinancing program is a time-driven opportunity allowing lenders to:

• Bring owner-occupied commercial real estate portfolios back into regulatory compliance.
• Reduce overall commercial real estate portfolio concentrations.
• Maintain current relationships with small business clients by offering favorable refinance loan terms and helping with loans coming due.

The loan structure of a 504 debt refinancing deal works the same as a regular 504 project: the commercial lender provides 50% of the financing and takes a first lien position on the collateral (land/building and equipment). Florida First Capital/SBA finances 40% of the project and takes a second lien position. The borrower provides a 10% equity injection in most cases.

Experience Counts

With more than 50 refinance projects under our belt, Florida First Capital has led the way among certified development companies in Florida to structure, process and obtain SBA authorizations for 504 debt refinancing loans since the program's inception.

We are the experts with the proven track record you can trust to get your refinance deals done quickly and efficiently.

Qualification Criteria

The basic requirements for a 504 debt refinancing loan are:

• The small business must occupy at a minimum 51% of the property at the time of the refinance application.
• The property must have been acquired at least two years ago with commercial debt.
• The loan must be current and the borrower must not have made any payments more than 30 days after the due date under original or modified bank terms for the past 12 months. Such modifications of terms must have been entered into prior to Oct. 12, 2011.
• The project structure must be based on the current appraised value of the collateral.
• Up to 90% of the current appraised property value may be refinanced.
• Existing government-guaranteed loans are not eligible to be refinanced.

Refinancing of Paid Off 504 Loans

Borrowers who have had 504 projects in the past, paid them off and might have additional debts secured by their fixed assets can also benefit from the temporary 504 debt refinancing program.

If a business has paid off its 504 loan, but still has debt on eligible business assets, it may be a great candidate for the refinancing of that existing debt. With today's record low 504 interest rates, and access to 20-year financing with virtually no cash down with sufficient equity, this program may help both former 504 borrowers and the lenders that are holding current debts.

Let's talk refinance before time runs out. If you have clients that are good candidates for refinancing their commercial debt, call us right away so we can get the process started.

For more information about SBA 504 loans in Florida, contact Florida First Capital by visitingwww.ffcfc.com, emailing atinfo@ffcfc.comor calling 888.320.5504.