The Small Business Administration announced yesterday (March 29) that it will lift the limits of temporary refinancing program for real estate mortgages it enacted last month under the Small Business Jobs Act of 2010. The program allowed small businesses facing maturing commercial real estate mortgages or balloon payments before Dec. 31, 2012 to refinance through an SBA 504 loan.
The expansion of the program means that more small businesses will be able to secure stable, long-term financing and avoid potential foreclosure on mortgages approved before, during and after the recession that were based on inflated real estate values.
“With the collapse of the real estate bubble , many small business owners have found themselves unable to refinance as a result of inflated real estate values at the time they took out their mortgage,” said Karen Mills, the SBA administrator. “SBA’s temporary 504 refinancing program was first made available to those small businesses with the most immediate need. Today’s step opens this critical assistance to more small businesses, giving them the opportunity to restructure their debt and free up capital that will be essential to keeping their doors open and also their future ability to grow and create jobs.”
To be eligible for the temporary 504 refinancing program, a business must have been in operation for at least two years, the debt to be refinanced must be for owner-occupied real estate and have been incurred no less than two years before the date of application and the proceeds used for 504-eligible business expenses, and payments on that debt must be current for the last 12 months.