SBA Announces Temporary Program to Refinance Commercial Mortgage Loans

Small businesses facing maturity of commercial mortgages or balloon payments before Dec. 31, 2012, may be able to refinance their mortgage debt with a 504 loan from the U.S. Small Business Administration under a new, temporary program announced on February 17, 2011.  More information can be found on the SBA’s website .

The traditional 504 loan program is a long-term financing tool, designed to encourage economic development within a community. The 504 Program accomplishes this by providing small businesses with long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization. Proceeds from 504 loans must be used for fixed asset projects, such as the purchase of land, including existing buildings, the purchase of improvements, including grading, street improvements, utilities, parking lots and landscaping, the construction of new facilities or modernizing, renovating or converting existing facilities, and the purchase of long-term machinery and equipment. 

The temporary 504 refinance program breaks from the traditional 504 program in allowing the refinance of existing debt instead of providing financing for the acquisition of capital assets. 

This new program could be the most significant of all the efforts thus far to stabilize the real estate market as well as to provide meaningful relief to small business owners.