NAR, May 16, 2012
1

Agenda
• Temporary 504 Debt Refinance Loan
Program
• Permanent 504 Loan Program
– Basic Program
– Permanent 504 Refi Program
504 Portfolio : 56,677 loans, $23.8 B in 504 loans;
$53.5 B in total project financing outstanding!
2

What is it for?
• To refinance owner-occupied commercial property and equipment (not already government guaranteed)
– Debt must be at least two years old
– Can finance up to 90% of current appraised value
– With sufficient equity, other businesses expenses and debt can be financed
3

TEMPORARY 504 DEBT REFINANCE
LOAN PROGRAM (CONT’D)
• Works like regular 504
• Equity in other fixed assets can be pledged to increase the financing
• Lock in long-term, low fixed-rate financing for working capital as well as real estate (about
5% or less)
• Must be current (on agreed upon terms the past 12 months
Expires September 27, 2012
4

Refinancing Using Equity in the Property
Appraised Value of Property $1,400,000
Outstanding Balance of Debt $1,260,000
90% LTV $1,260,000
• First Mortgage Loan
• SBA 504 Loan
$700,000
$560,000
• Borrower Equity Contribution $140,000
Borrower uses equity in property to lock in 44% of debt at long-term, low fixed-rates
5

Maximum Working Capital
Appraised Value of Property $1,400,000
Outstanding Balance of Debt $1,000,000
90% LTV $1,260,000
• First Mortgage Loan $700,000
• SBA 504 Loan $560,000
• Borrower Equity Contribution $140,000
• Proceeds for Working Capital $260,000
Borrower benefits from lower cost working capital and
44% of debt at long-term, low fixed-rates
6

Other Collateral Added to the Deal to Maximize SBA Debt
Appraised Value of Property $ 800,000
Outstanding Balance of Debt $1,000,000
Appraised Value of Other
Pledged Collateral
80% of Total LTV
$ 600,000
$1,120,000
First Mortgage Loan
 SBA 504 Loan
$560,000
$560,000
 Borrower Equity Contribution $280,000
 Available for Working Capital $120,000
Borrower gets:
- 50% of their debt fixed
- to refinance an underwater loan
7
- working capital
7

For more information about the Jobs Act 504
Debt Refinance Program contact: jobsact_debtrefinancing@sba.gov
To find a SBA Certified Development Companies that service you area :
• Contact the nearest SBA SBA District Office
• www.sba.gov
Or:
Linda Reilly, Financial Analyst
202-205-9949 linda.reilly@sba.gov
8