October 2010 Newsletter

October's SBA 504 20-year effective rate is 4.52%. 10-year bonds were sold last month. The September SBA 504 10-year effective rate was 3.69%. (Rates may vary slightly based on approval date.)

The President has signed the bill HR 5297, which included several SBA loan enhancements. Some of the enhancements are in effect almost immediately; however, the refinance is not available until SBA completes the regulation.

This can be a good time for the banks to go through any existing loans they would like to be refinanced via the SBA 504 program. EDF staff is readily available to assist in this process.

SBA 504 Loan Enhancements

The jobs bill included several SBA 504 loan enhancements. Below is a list of the changes to the program. Please click the link below for detailed information on the loan enhancements:

-Fee Reductions

-Maximum Loan Amounts

-Alternative Size Standards

-Debt Refinancing

-Guarantees of first mortgage Loans

SBA 504 Loan Enhancements

Refinancing Details

As part of the Small Business Jobs Bill, there is a temporary provision for refinancing debt that does not involve an expansion. This provision is only good for 2 years, and then will be eliminated. The main requirements are:

-90% of appraisal OR

-100% outstanding principal (whichever is lower)

-70% LTV for same institution debt, 20% SBA

-50% LTV for new institution debt, 40% SBA

-Original loan funds must be 504 eligible

-Not eligible for fee waivers (ARRA funds)

-Loan in place for at least two years prior to refi

-Loan has been current for the past 12 months

-Within one year of maturity

The refinance option is not available yet. Both SBA and the Office of Management and Budget (OMB) are writing the regulations and/or policy changes needed. However, we do have some information to share with you. Please click the link below, which details the refinance option:

Refinance Information

"Financing Growing Businesses in Michigan Since 1981"

May-12