Yellow Pages Association Blog

I was pleased to see an announcement from the U.S. Small Business Administration last week and thought I’d repeat it in case anyone else missed it:

The U.S. Small Business Administration has just announced permanent changes to its 504 loan program that will enable small-business owners to refinance any existing loan to buy real estate or equipment or build.  These new rules are part of the American Recovery and Reinvestment Act passed in February, and also include provisions to lower borrower fees, restart the secondary market for small-business loans and offer emergency loans.

The timing is critical.  As we’ve seen with our customers in recent months, small local businesses – which constitute the backbone of the American economy – have really taken a hit.  These amendments mean that small businesses will get more support to grow in the recession.  As The Wall Street Journal’s Raymund Flandez reported:

“This is one more piece of the Recovery Act that is going to have a direct impact and put more money in the hands of small business owners just when they need it most,” SBA Administrator Karen G. Mills said in a statement. “Lower interest rates mean lower payments and less money going out the door each month in debt repayments.”

In order to be eligible for the new 504 benefits, a business must meet these conditions:

• The refinanced debt cannot exceed half of expansion costs.
• The refinancing interest rate and terms must be better than the existing debt.
• The existing debt must be collateralized by fixed assets.
• The borrower must be current on existing debt payments for one year.
• For every $50,000 in SBA guarantee, the business must create or retain one job.

More details about the program can be found on the SBA website.