Small business owners struggling to refinance commercial loans will now have another option through 2012. The U.S. Small Business Association (SBA) has extended its 504 loan program through the end of 2012[1]. Previously intended to expire at the end of September in 2012, now commercial real estate loans maturing after December 31, 2012 can be refinanced through the program. In the program, borrowers can refinance up to 90 percent of the appraised property value or 100 percent of the outstanding mortgage, whichever is lower.
This program provides long-term financing at competitive interest rates and payment predictability over the life of the loan, which makes these loans extremely attractive to small business owners who have previously been stuck in shorter-term loans that they were unsure if they could refinance[2]. Furthermore, the program allows for business structures that limit liability and maximize tax benefits to the owners. David Jensen, part-owner of a biomedical equipment repair and supply company, credits the 504 program with his company’s ability to grow in this troubled economy, saying “the SBA program allowed us to get additional space and conserve our capital to use for growth.”
Some critics complain that this program is just another government loan program. Do you think that the SBA 504 loan program is helping or hurting the commercial market?
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[1] http://www.dallasnews.com/business/headlines/20110404-small-business-administration-extends-real-estate-loan-program-through-2012.ece
[2] http://www.courierpress.com/news/2011/apr/04/sba-504-loan/
