SBA Loan to Refinance Existing Small Business Debt




During 2012 a third of all U.S. Small Business Administration “SBA” 504 loans funded was to Borrower’s who needed to refinance real estate, equipment, and other short-term debt.  As with any refinance, the motivation is pretty simple, Borrower’s want to restructure their debt to provide more favorable terms. Unfortunately, this program ended on September 30, 2012, but there is renewed hope.


In 2015 there are two related but independent pieces of legislation working through the House of Representatives and Senate that, if signed into law, would essentially allow refinance loans to again be a vital option for our small business community. Senator Jeanne Shaheen (D-NH) introduced Senate Bill 966 on April 14, 2015 and Representative Judy Chu (D-CA) re-introduced H.R. 1240 on May 12, 2015.


As reported by Representative Chu, during the 2012 trial year for the program more than 2,700 businesses refinanced almost $7 billion in debt. It is important to note that the pending legislation requires that for the refinance program to be available the SBA 504 program must continue to be a zero subsidy program. Said another way this means that the SBA 504 program costs the taxpayer nothing.


The need for this program is all too real for many real estate borrowers out there. Many commentators have described a very real and looming problem in the commercial real estate community where borrowers obtained loans through Commercial Mortgage Backed Securities (CMBS), which will be coming due in the next 3 to 5 years.  The problem is that the value of the underlying property value has not recovered from the declines experienced in our most recent economic downturn to support traditional refinance channels. This could mean that there will be a large number of borrowers, all of which have been making their payments in a timely manner, who will find themselves in danger of foreclosure and total loss.


If you think you might be in this situation give our office a call immediately (714-202-1604), so that we can begin to working towards a solution. Acting early is vital, as the threat of a pending maturity date is very real, so do not delay.


If you would like to lend your support; an online petition is available here.


At NonBank Lender we are concerned with all things that affect our small business clients. Our success is very much intertwined with yours. As an active advocate for our clients we not only provide financing alternatives, but diligently work to ensure that government sponsored programs like the SBA are available to the greatest number of small businesses owners possible.