Update on the Debt Refi Legislation

August 19th, 2013

Update on the Debt Refi Legislation

SBA 504 Refi Program Update

June 24, 2013, we asked you to help us by supporting and signing our petition to congress to help support the zero subsidy S.289 CREED Act of 2013 with the restoration of the SBA 504 commercial real estate program that ended in September of 2012.

When the SBA 504 refi program ended in September of 2012, many small business owners lost their chance for a refinance opportunity at affordable rates and within affordable parameters.

Since our June post, there have been some recent changes regarding the SBA 504 Refi Program and we’d just like to give you an update on those changes.

A New Agreement

Under the SBA 504 program, the National Association of Development Companies (NADCO) provides financing for small businesses, and Debbie Partin, the NADCO Vice Chair of Legislative Affairs recently provided the lasted update regarding the status of the SBA 504 refinance program.

Under an agreement agreed upon by the chairman and ranking member of the State Committee on Small Business and Entrepreneurship, Senators Jim Risch (R-ID) and Mary Landrieu (D-LA), the refi program will become permanent only in a fiscal year that the regular SBA 504 program is at a zero subsidy rate. Presently, for fiscal year 2014, the program’s subsidy is at a 1.71 rate.

NADCO has been and continues to work diligently towards a fee package resolution that will completely eliminate this subsidy, but so far they have not had much success with that. The 1.71 subsidy rate requires the elimination of huge fee increases. SBA continues to work with NADCO on this problem and they are hopeful that they will find a solution for fiscal year 2014.

Waiting for the Fiscal Year 2015 Budget

Where things stand for now is that NADCO and SBA are patiently waiting for the President’s FY15 budget to be released, along with the program’s subsidy rate for that year, which is expected to be released sometime in February of 2014.

At that time, NADCO and SBA are hopeful to see a significant improvement in the program’s subsidy rate. According to SBA, both the portfolio and program recoveries seem to be making a significant improvement, with the improving economy.

Continue to Voice Your Support

Throughout this process and wait, as always, NADCO, SBA and those of us at TMC strongly encourage you and urge you to voice your support for the SBA 504 refi program to congress. NADCO and SBA are doing their part, but congress needs and wants to hear from you, the small business owners and supporters. Congress wants to know what YOU want.

SBA 504 was able to help 2,700 small businesses refinance old and expensive debt, let’s continue to do our part by voicing our support of the growth of small businesses everywhere. You can voice your support by writing a letter to congress in support of legislation to return the SBA 504 refi program with a zero subsidy permanently.

For more information on this legislation please visit the following links:

Petition to Congress

Evergreen Business Capital