SBA 504 Refi Program is Back!

SBA 504 Refi Program is Back!

By Stephanie Gerringer504 RefiIs Back!

So it is FINALLY BACK!!!  The SBA 504 refinance Bill, also known as the Commercial Real Estate and Economic Development Act of 2015 (simply the CREED Act) or part of the Omnibus Bill.  I don’t care what you call it, or how it got passed frankly, I am just thankful that it did!  This is one heck of a Holiday gift!  The Omnibus Bill that passed on December 18th, includes a provision to reauthorize the 504 refinance program at $7.5 Billion to help business owners refinance their existing commercial mortgages and to increase their availability to affordable credit.

I want to give a big round of applause to our trade association NADCO for their undying efforts to advocate and get this permanent 504 debt refinance program into law, as the last time this program was around it was in 2012.  There will be a minimum of 4-6 months to issue the regulations and the forms needed to start the program up again and make it functional.  As it goes, there are several additional restrictions on the new rules and regulations.   NADCO is already working with the powers that be within SBA to help expedite the process and work on those boundaries.  The bottom line is this, at least there is something to work towards.

Currently, the 504 program only allows for acquisition loans of new projects: land and construction, property itself or heavy duty equipment.  The reenactment of the refinance bill will dramatically increase the number of loans that can be made and allow banks the opportunity to partner with SBA/ Certified Development Companies (CDC’s) the liaison for such 504 loans radically.   The benefit to the 504 loan new or refinance product is the fixed rate loan and long amortization.

In 2012 when the bill originally expired, it was reported to have helped refinance $5 billion of debt for small businesses throughout the U.S.  We’re excited for the potential to exceed that number with the reinstatement of the program.  Stay tuned for updates on this topic from the “Preferred Team”.

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