SBA Releases Guidelines for 504 Program
Disclaimer: Please read this email while sitting down. The RDC is not responsible for any injury caused if a recipient faints during the reading of this email. The sender cautions against anyone who has a heart condition or is pregnant from reading this email, as it may cause excitement, heart palpitations and other health conditions. The SBA has released today the guidelines for 504 program debt refinance, per Coleman Small Business Lending. It is expected that the official regulations will be published within the week and we will forward that information as soon as it is available. Applications for the refinance program can be accepted as soon as the rules are published.
Highlights of the guidelines:
· Only mortgages that are maturing or renewing prior to December 31, 2012 will be eligible for the first phase of the program, a currently undetermined period of time
· After this undetermined period of time, the program will be opened to other debt refinance, though the guidelines for this are not yet available
· The ongoing guarantee fee for refinanced loans will be slightly higher at 1.043%, thus increasing the Effective Interest Rate of these loans above the typical 504 loans · Borrowers can refinance up to 90% of the property’s fair market value as determined by an appraisal at time of application
· Additional collateral can be added if appraisal is insufficient to cover the loan amount being refinanced · Loans must have been written more than 2 years prior to date of application and must have been current for the preceding 12 months · Job creation is not a requirement, but the borrower must currently employ 1 full-time person for every $65,000 in SBA debenture
· Debt that is guaranteed by the government (7a, USDA, 504) is not eligible for refinance · Debt that is part of a 504 loan project (bank’s 50% portion) is not eligible for refinance Please note that this is all the information we have available at this time. We anticipate further information in the coming weeks and will share with our partners as soon as we are able.