As part of the Small Business Jobs Act of 2010, the Small Business Administration provided temporary authority allowing refinance of existing eligible debt under the SBA 504 loan program. The program, administered through Certified Development Companies (CDCs), typically finances acquisition of owner occupied commercial property and large equipment. In an effort to stimulate the economy, the loan program can now temporarily refinance certain eligible debt on property.
Montana Community Finance Corporation, in partnership with Zions First National Bank, Idaho Falls, ID, obtained SBA approval under this temporary authority, the first such loan made in the State of Montana since this change was made to the program.
Derek Ence, Ence Properties LLC owner dba Hotel Developers Missoula Staybridge, said “I think the SBA helping us small business owners refinance our property in this difficult lending environment is a very helpful thing to help the economy recover and provide jobs for our good local people.”
Zions Bank utilized the new SBA 504 Refinance Program to benefit the customer, local community/economy and to strengthen Zion Bank’s position, including:
giving Zions Bank some flexibility if the borrower/hotel requests future funding needs to capital/FF&E improvements;
offering the SBA portion at a low fixed rate for 20 years, benefitting the borrower’s cash flow; and
increasing the term of the loan to 10 years instead of the standard 5 years, with SBA backing, utilizing a 25-year amortization.
Linda Kindrick, Montana Community Finance Corporation executive director, the CDC that facilitated the loan approval, said “Derek is a great customer and business owner. He was easy to work with in preparing the application for the loan. Allan Woolley, Zions Bank, was also very accommodating in supplying all the information needed to meet the requirements for refinance of their existing debt. We are proud to have been able to help both the business and the bank take the next step.”
The refinance of certain eligible debt is a temporary program that ends Sept. 27, 2012. Banks and small businesses need to act fast to take advantage of this great refinancing option.
The basics of the SBA 504 refinance loan are simple:
To be eligible, the small business must be a for-profit company that has a tangible net worth of less than $15 million and after tax profit of less than $5 million.
• The debt to be refinanced must have been entered into at least 24 months prior to the SBA refinance application
• The qualified debt must be for a commercial loan which is current and has been paying as agreed under the original or modified bank terms for the past 12 months
• The eligible small business must currently occupy 51% of the property to be refinanced
• The refinanced amount can be up to 90% of the appraised value of the subject property
• Existing 504 projects and government-guaranteed loans are not eligible to be refinanced
Montana Community Finance Corporation (MCFC) is a Certified Development Company licensed and regulated by the U.S. Small Business Administration (SBA) to deliver 504 loan financing. MCFC’s role is to package, process, close and service SBA 504 loans in the state of Montana and has been doing so since 1984. The professional staff, located in Helena, works with the lender and/or the small business owner to tailor a financing package that meets program guidelines and the credit criteria of the business. Contact MCFC at 406-443-3261 or http://www.mtcommunityfinance.org to see how they can help you – whether it be refinance of existing debt or new financing.
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