New debt refinance program of SBA proves to be helpful to the small businesses

Do you own a small business organization and are you spending sleepless nights thinking about the future of your business in this tough economy? If you’ve almost overdosed yourself with the tension due to declining business revenues and you’re screaming for help in this tough economic crisis, you may get help from the small and the middle sized institutions in order to repay your debt by combining your monthly payments. The new SBI debt refinance program can offer you with free capital that you can use in order to finesse your business finances. So, if you’re interested in repaying your business debt, here are some points that you may need to know on SBA small business debt refinance program.

The new debt refinance program introduced by the SBA

The SBA or the Small Business Administration through the Certified Development Company has introduced a new financing tool that can help you consolidate your existing high interest debt obligations and replace it with a lower rate loan which is usually a fixed rate one. The business organizations can build equity and use the proceeds for eligible business expenses and for purchasing inventory working capital.

The benefits of the new refinance program for the small businesses

Through this debt refinance program, you can refinance your existing debt with a long term loan. If the borrower has equity that is more than 10%, he can also borrow against the equity. SBA 504 loans are loans that are funded by the 10 year or 20 year sale bonds that have been guaranteed by the SBA. The interest rates on such loans are below market and the present rates are as low as 5.06% for a 20 year SBA 504 loans.

Which business organizations are eligible for such loans?

In order to qualify for such loans, the small business organization should be in existence at least 2 years before it applies for the loan from the SBA. The business organization needs to be a for-profit organization with tangible net worth of an amount that is somewhere close to $15 million and should also owe an after-tax profit of less than $5 million. The business also needs to occupy at least 51% of the real estate property that is to be refinanced and it also has to be acquired at least 2 years ago with debt. The borrower also has to show that the loan is current and that he hasn’t made any payments since the last 30 days.

With such SBA 504 loans, the bank will provide up to 50% of the cost of the project and will hold the lien in the first position. Though there is no particular limit on the project size, you can take out an amount that you may need and thereby manage your finances in order to make payments. Don’t default on the payments of the loan as this will lead to a hurt in your credit score.

About the Author

Mark Jefferson is a seasoned commercial finance professional with over 25 years’ experience in financial services, much of that spent providing funding to SMEs. Mark has worked with many other firms in a similar situation to yours. Call Mark on 01451 832533 and you can also follow him on Google+

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