The Small Business Administration?s 504 program, which has helped small businesses over the past two years refinance their commercial real estate mortgages, is unfortunately coming to an end. The program pairs government-guaranteed loans made by nonprofit certified development companies with conventional loans for real estate projects and other fixed assets. As a result, businesses were able to obtain lower interest rates on their real estate loans and avoid balloon payments on their old mortgages.
The program has proven very successful, as many businesses have found it difficult to refinance in recent years as a result of the turmoil in the commercial lending sector following the recession. As of Sept. 14, nearly 2,300 small businesses have taken advantage of the program, for a total of $2.1 billion in 504 loans. Furthermore, the SBA reported that there are many more applications in the works that could be approved before the program ends on Sept. 27.
Chris Crawford, president and CEO of the National Association of Development Companies, said that total refinancings from the program might end up totaling about $2.5 billion when all is said and done.
Attempts have been made to try and extend the life of the program, especially with the continued tight market for conventional commercial real estate mortgages. Advocates of the 504 program lobbied Congress to extend the program, but the bill never reached the Senate floor. Advocates such as Crawford will continue to push for an extension, but he said the current political environment is the challenge as advocates have tried everything they can to extend the program.
Even though credit has thawed somewhat from the recession, it is still not easy for many small businesses to refinance their commercial real estate loans. It is unfortunate that the current political climate is preventing continuance of such a worthy program that would help in a small way to boost the economy.
Source: http://journalrecord.com/2012/09/19/cre-blog-sba-refinancing-program-coming-to-an-unfortunate-end/
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