FOR  IMMEDIATE RELEASE   Alabama Companies to Benefit from SBA Loan Program Changes  SBA changes have positive effect on Alabama companies, helping to retain and create more jobs. 

State of Alabama (July 29, 2009)  -  Alabama small businesses wishing to renovate and expand are benefiting from recent changes to The U.S. Small Business Administration 504 loan program, the primary loan program for small businesses to purchase real estate, construct new buildings, and purchase equipment.  Permanent changes to the program will allow small businesses that are expanding or renovating to also refinance eligible debt to help improve their cash flow which, in turn, will enhance their viability and support growth of job creation. Since the announcement of this change in late June, we have begun working with several businesses in Alabama to refinance some of their existing fixed asset debt while making significant improvements to their business property.  The result is they will be more competitive in today’s challenging economy, will keep people working, and will have the cash flow benefit of putting their existing fixed asset debt and expansion costs in a low fixed rate, 20 year loan.

 

The new legislation allows 504 program projects to include a limited amount of debt refinancing if there is a business expansion and the debt refinanced does not exceed 50 percent of the projected cost of the expansion. “Expansion” includes any project that involves the acquisition, construction or improvement of land, building or equipment for use by the small business.

 

According to new SBA Administrator Karen G. Mills, “This is one more piece of the Recovery Act that is going to have a direct impact and put more money in the hands of small business owners just when they need it most.  Lower interest rates mean lower payments and less money going out the door each month in debt repayments. That means more cash on hand to keep their doors open, their employees working and to even expand and create more jobs.”

 

Mills pointed out that the 504 program’s refinancing changes are the latest in several Recovery Act provisions that have been implemented by the SBA in recent months. On March 16, the agency temporarily raised to 90 percent the guarantee level on many of its 7(a) program loans and reduced fees on both 7(a) and 504 loans.

 

Other entities report that since the enhancements to the SBA lending programs have been announced Alabama SBA loan requests have significantly increased.  “Small business owners as well as our bank lending partners see the benefit in reduced fees, higher guarantee percentages, and lower loan payments that improve cash flow.    Rates for our loans that funded in July were as low as 5.24% fixed for 20 years.  Equipment loan rates were even lower, at 4.37% for 10 years.  It doesn’t get much better than that.”

 

Small businesses that could benefit from these changes should contact us determine available options.