A Small Business Administration (SBA) program designed to enable businesses that owned their own real estate to refinance their loans through a program that offered lower interest rates is set to end next week – with no hope for an extension in sight.
The Washington Business Journal reports that the refinancing concept of SBA's 504 program paired government-guaranteed loans made by nonprofit certified development companies with conventional loans for real estate projects and other fixed assets. This enabled businesses to get lower interest rates on their real estate loans, avoid balloon payments on their old mortgages and even turn equity in their real estate into working capital. As of Sept. 14, nearly 2,300 small businesses took out $2.1 billion in 504 program loans.
The 504 refinancing program was planned as a two-year endeavor and is set to end on Sept. 27. However, additional refinancing applications are still in the programs pipeline. Sen. Mary Landrieu, D-La., the chairwoman of the Senate Small Business and Entrepreneurship Committee, sponsored legislation to extend the refinancing program. However, the bill has yet to reach the Senate floor for a vote, and no similar legislation is on the agenda of the House of Representatives.