After years of advocating on Capitol Hill by commercial real estate industry leaders, the SBA 504 Loan Refinancing Program was permanently reinstated on December 18, 2015, more than three years after it expired in 2012. Also known as the Commercial Real Estate and Economic Development (CREED) Act, the program will allow small business owners to refinance eligible business debt into a new loan through the SBA 504 program.
Since the current SBA 504 program only allows for acquisition loans, the number of loans that can be funded under the SBA 504 program will increase dramatically. One of the many key benefits of the SBA 504 program is that it is a fixed rate loan as opposed to the typical floating rate loan found in the SBA 7(a) loan program that finances the same types of borrowers. The SBA 504 Loan Refinancing Program was originally enacted as part of the Small Business Jobs Act of 2010, but after a period of growth, the program expired in 2012.
Since 2012, industry groups have been lobbying to reinstate the program permanently. The leading argument in favor of the program is studies that indicated the program operated at no cost to taxpayers. Finally, in December 2016, the program was made permanent.
However, the SBA indicated it would take approximately four to six months before the program can close its first loan. The SBA is actively working on updates to the SOP (essentially the loan underwriting and closing manual for SBA loans), which will include new forms and procedures for lenders and borrowers to close loans in the program. Based on the timeline presented by the SBA, the SOP should be issued in May or June.