The Small Business Administration expanded its 504 Certified Development Company loan program to allow small businesses to refinance existing loans used to purchase real estate and other fixed assets.
The changes, authorized in the American Recovery and Reinvestment Act of 2009, will allow small businesses to restructure eligible debt to help improve their cash flow, according to the Marine Retailers Association of America. The SBA 504 loan program can be used to purchase business real estate or fixed assets, such as heavy equipment or machinery.
The program is administered through 271 Certified Development Companies across the nation. Specific changes 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, buildings or equipment for use by the small business.
Qualification requirements are that the borrower must have been current on all payments of existing debt for one year; the existing debt is collateralized by fixed assets; the new financing provides a substantial benefit to the borrower and the debt being refinanced was incurred to acquire land, construct a building or purchase equipment.