October 30th, 2009
On October 28, the SBA announced a new SBA 504 guarantee program for the first mortgage position loans originated by senior lending partners. Due to the decline in secondary market activity for first mortgage SBA 504 loans (50% of the total project amount) the SBA has instituted this new program to ensure lenders have a place to sell first mortgage loans to quickly turn it into the liquidity they need to make more business loans.
How it will work: a portion of eligible SBA 504 first mortgages pooled by originators or broker dealers could be sold to third-party investors in the secondary-market with an SBA backed guarantee. Pool originators will assume 5% of the risk, lenders will retain at least 15% of the loan, and the SBA will guarantee the last 80%.
The program will be active until February 16, 2011 or until $3 billion in new loan pools have been created, whichever comes first.
Under the new program, portions of eligible 504 first mortgages pooled by originators or broker dealers could be sold with an SBA guarantee to third-party investors in the secondary market. Lenders will retain at least 15 percent of each individual loan, pool originators will assume 5 percent of the risk, and the SBA will guarantee the remaining 80 percent. To be eligible to be included in a pool, the first mortgage must be associated with a 504 loan disbursed on or after Feb. 17, 2009. The program will be in place until Feb. 16, 2011, or until $3 billion in new pools are created, whichever occurs first.
Click here to read the full press release.
September 15th, 2009
The September 2009 SBA 504 interest rate was at an all time low - 5.143% fixed for 20 years! Fees are projected to remain at their historic lows through the end of 2009.
SBA 504 provides your business access to financing for fixed assets at low cost with lower equity requirements.
July 27th, 2009
The Recovery Act provided the SBA Surety Bond Guarantees up to $5 million for all public and private contracts and subcontracts.
SBA partners with the surety bond industry (contact your local bonding agency) to help small businesses that would otherwise be unable to obtain necessary bonding in the traditional commercial marketplace. To increase confidence of the bonding agency, the SBA provides a guarantee to that agency for 70% to 90% of the bond amount.
On July 23, the SBA announced that it can now provide surety bond guarantees specifically on federal contracts valued up to $10 million, if the contracting officer certifies that the guarantee is in the best interest of the federal government.
Additional program enhancements include authorization for the SBA to exercise discretion in deciding bond liability issues, as well as a definition of “Order” issued under an Indefinite Delivery Contract.
The increased size standard will be in effect until September 30, 2010.
For more information or a list of local participating surety agents go online to http://www.sba.gov/osg/.
June 23rd, 2009
Certified Development Companies can now refinance existing debt for expansion projects using the SBA 504 loan program. The amount of existing indebtedness to be refinanced may not exceed 50% of the cost of the expansion. The refinanced debt will be be added to expansion costs to determine the total project costs. Here are the parameters for eligibility:
(a) Proceeds of the indebtedness were used to aquire land or building, building construction, or to purchase equipment.
(b) Existing debt is collateralized by fixed assets. Going forward the SBA 504 must collateralize the fixed assets being refinananced (or a portion of the fixed assets if partially refinanced).
(c) The existing indebtedness was incurred for the same business concern for which the new project costs are being incurred. Existing debt can include conventional or current 504 debt.
(d) Refinance costs must relate to the expansion project being financed.
(e) Projects including refinance must demonstrate a “substantial benefit” to borrowers; defined as a 10% reduction in loan installments after consideration of fees, prepayment premiums, and other financing costs; or as otherwised defined (in certain circumstances).
(f) Borrower must be current on all loan payments within one year of SBA loan authorization.
(g) SBA 504 is always made avaliable with the intention of offering benefit to an expanding and growing company by offering an interest rate savings; a longer-term, fixed rate (commensurate with the useful life of the asset), or less restrictive loan covenants.
(h) Proceeds from the refinance cannot be used to pay a creditor in a position to sustain a loss in the transaction.
June 15th, 2009
Web sessions are being provided by the SBA Columbus District Office to Ohio companies and entrepreneurs related to the new developments to SBA lending related to ARRA. Webinars are free, but require registration. Participants call in on a toll-free number and follow the presentation online.
July 7 - 10 am - KeyBank: Discussion on lending and Key programs
July 14 - 10 am - SBA Programs: Updates on SBA lending
July 21 - 10 am - IRS: Sharing tax incentives affecting small business
To Register: Email Shannon.Feucht@sba.gov or call 614.469.6860.
April 14th, 2009
The 20-year fixed interest rate for the SBA 504 loan program is historically low at 5.25% for loans that are funded in the month of April. Each month the SBA 504 has a new interest rate, in 2009 the interest rates have been the lowest ever in the life of the program. If a company is in a sound position, wanting to take on a new fixed asset project (building purchase, renovation, expansion, or equipment purchase) this is a great time! The loan fees are only at 0.65% and interest rates are low.
April 3rd, 2009
Click here to read frequently asked questions about the SBA 504.
March 18th, 2009
Elimination of SBA 504 Fees for Borrowers and Third-Party Lenders
The SBA announced that it will be eliminating the fees for the Small Business Administration’s section 504 Development Company Program for loans approved on or after February 17, 2009 based on Section 501 of the American Recovery Act of 2009.
Loans approved on or after February 17, can expect to see the elimination of the Third-Party Lender fee of 0.50 % and the Certified Development Company (CDC) Processing Fees of 1.50 %. CityWide will be reimbursed by the SBA for the waived fees.
The SBA will not permit the cancellation of approved loans prior to February 17, 2009 for resubmission to qualify for the fee refund. Refunds will be made to eligible borrowers or lenders who have already paid their SBA 504 loan fees. It is estimated that the program level for the fee elimination is $3.6 billion dollars, and depending on the loan volume, is approximated to eliminate the fees on loans approved through December 31, 2009.
Summary: What It Means To You
February 17th, 2009
The American Recovery and Reinvestment Act of 2009, more commonly referred to as the Stimulus Bill, was passed into law on February 17, 2009. This legislation was passed to tailor policies and fund various federal programs and agencies and has many great advantages for small businesses.
In particular, the law put many positive changes into effect through the U.S. Small Business Administration (SBA) that your company may be able to take advantage of. With the creation of any new program or funding process, decisions are not often implimented overnight.
As a service provider of the SBA 504, CityWide intends to keep you as up-to-date as possible on the implimentation plans as they are announced. Please continue to revisit our website to understand how the SBA 504 program can better serve your company in partially financing the fixed-assets you need to continue growing. The long-term, attractive fixed rates that can help you hedge your cost to borrow funds.
To stay current on the broader impact of the Stimulus Bill, visit the website RECOVERY.GOV. You can also visit the FAQ from business owners.
Read the full text of the American Recovery and Reinvestment Act of 2009.
February 17th, 2009
Businesses in Dayton in search of some financial assistance should consider applying for SBA 504 loans. The Small Business Administration 504 loan program (SBA 504 loans) was created to help small to mid-sized business owners acquire property or other uses. SBA 504 loans are intended to be a long-term financing tool that will help boost economic development within communities such as Dayton.
SBA 504 loans are often easiest to understand with the help of a certified development corporation, such as CityWide Development. These nonprofit organizations are tasked with furthering economic development in their specific areas, and they work closely with the SBA and private lenders to help small businesses find financing, including providing guidance on SBA 504 loans. The SBA 504 loans may then be used for reasons such as real estate, new construction, renovations, equipment purchases, and other project related costs.
SBA 504 loans typically act as a traditional mortgage for up to 50% of the project’s total cost. In addition, SBA 504 loans require that another 40% be covered by a government-guaranteed bond, and the remaining 10% should be contributed by the business owner’s equity. This 10% is usually half the percentage of what private lenders would normally require, leading to much less risk on the business owner’s behalf.
SBA 504 loans do have some criteria for eligibility. According to CityWide Development, businesses interested in SBA 504 loans must have a net worth not exceeding $7 million. Their average profit after taxes for the last two years must not exceed $2.5 million. In addition, businesses receiving SBA 504 loans must create one new job for every $50,000 worth of SBA funds lent. The amounts in which SBA 504 loans are awarded can vary from $50,000 up to $4 million.
For more information on SBA 504 loans in Dayton, contact CityWide Development Corporation at www.citywidedev.com.
