This new debt refinancing authority will allow expanding small
businesses to restructure qualified existing debt as part of new 504 loans. This will enable small business owners
to free up critical capital to expand their businesses and create jobs.
The interim final rule is effective as of the date of publication
- June 23 - and is a permanent change to the 504 program. A copy of the Federal Register Notice is available for
download from the SBA main website. Also available for download are SBA Policy Notice 5000-1108 with the
changes to SOP 50-10(5)(A) for debt refinancing and SBA Information Notice 5000-1109 announcing that Version 2009.1
of the Authorization will be released. NADCO is coordinating with SBA to notify you as additional SBA Notices, the
updated Authorization Wizard and revised SBA forms are released. Updates will be provided as they become
ARRA Debt Refinancing Eligible Project Costs and Program
The following list is the conditions that a Project must meet to
be eligible for debt refinancing:
1. Debt refinancing is available for 504 loan applications
received by SBA on or after June 23, 2009. Those 504 loan applications received or approved prior to June 23, 2009
may be modified to include debt refinancing provided that the debenture has not been funded.
2. The 504 Project must include expansion of a small business.
"Expansion" is broadly defined to include any Project that involves the acquisition, construction or improvement of
land, building or equipment for use by the small business.
3. Qualified refinancing - the existing indebtedness to be
refinanced may not exceed 50 percent of the Project Costs. The existing debt may consist of one or more loans and
may be owed by an Operating Company, an Eligible Passive Company or both. Existing debt may include instruments
that will result in transferring ownership of the property to the small business, including land sales contracts,
contracts for deed or capital leases (but not operating leases).