SBA Debuts Refi Program for Commercial Mortgages

February 25th, 2011

SBA Debuts Refi Program for Commercial Mortgages

As published in the San Francisco Business Times by Mark Calvey on Friday, February 25, 2011:

SBA Debuts Refi Program for Commercial Mortgages

Small business owners with underwater commercial real estate mortgages coming due this year or next shouldn’t be surprised to hear from their bankers about an SBA pilot program.

The Small Business Administration this month debuted a refinancing program for borrowers who are having trouble securing a new commercial real estate loan because their property appraises too low.

That’s the sad state of affairs for many who bought in the peak bubble years of 2006 and 2007, using traditional five-year commercial mortgages.

“Even small businesses that are performing well and making their payments on time could face foreclosure because of the difficulties they have in refinancing and restructuring their mortgage debt,” said SBA Administrator Kim Mills, who anticipates 20,000 borrowers will be assisted through the pilot program.

Existing SBA 504 borrowers are not eligible for the SBA’s refinancing program.

“This pilot program is the most significant change in SBA lending since the start of the recession,” said Barbara Morrison, president of TMC Development, who works with business owners to secure mortgages under the SBA’s 504 program.

Morrison anticipates the program will keep a lot of employees on small-business payrolls.

Currently, small business owners trying to refinance mortgages on their owner-occupied commercial real estate often have to bring a lot of cash to the table to achieve a loan-to-value ratio that make both bankers and their regulators comfortable.

That usually means severe cost-cutting and layoffs.

For more information and to read the article, please visit: San Francisco Business Times article or the TMC website.