SBA 504 Loan Changes Increase Small Business Access to Capital

The Small Business Administration has announced permanent changes to its 504 loan program to allow small businesses greater access to capital, refinance existing debt, expand, and create new jobs.

The changes announced today include (from the SBA press release):

Debt Refinancing: Legislation allows 504 program projects to include a limited amount of debt refinancing if there is a business expansion and the debt refinanced does not exceed 50 percent of the projected cost of the expansion. “Expansion” includes any project that involves the acquisition, construction or improvement of land, building or equipment for use by the small business.

Eligibility for the 504 loan includes:

• The debt being refinanced was incurred to acquire land, to construct a building or to purchase equipment. The assets acquired must be eligible for financing under the 504 program.
  
• The existing debt is collateralized by fixed assets.
  
• The existing debt was incurred for the benefit of the small business.
  
• The new financing provides a substantial benefit to the borrower when prepayment penalties, financing fees, and other financing costs are taken into account.
  
• The borrower has been current on all payments of existing debt for one year prior to the date of refinancing.

strong>What are 504 Loans
The CDC/504 loan program is a long-term financing tool for economic development within a community. The 504 Program provides growing businesses with long-term, fixed-rate financing for major fixed assets, such as land and buildings. A Certified Development Company is a nonprofit corporation set up to contribute to the economic development of its community. CDCs work with the SBA and private-sector lenders to provide financing to small businesses. There are about 270 CDCs nationwide, with each covering a specific geographic area.

If you think you may be eligible for the 504 loan program, contact your local SBA office ... and get that business plan together.