Florida First

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Jobs and Credit Act (HR 5297) Provides Key Changes for 504 Loan Program A number of very substantial benefits for America's small businesses were incorporated into the Small Business Jobs and Credit Act of 2010 (HR 5297), recently enacted into law. As a result of the act, many more small business owners across the country now qualify to receive Small Business Administration (SBA) 504 loans. The net worth for companies to be eligible for a 504 loan was increased, maximum loan size was raised, program fee waivers were continued and refinancing of existing debt was also approved. Here is a synopsis of the changes: -- Continues the temporary elimination of both the 504 bank participation fee of 0.5% and the certified development company (CDC) processing fee of 1.5% through Dec. 31, 2010, or until the appropriation funds are exhausted. The fee waiver, which saves borrowers thousands of dollars in up-front costs, was first enacted in February 2009 as part of the American Recovery and Reinvestment Recovery Act (ARRA). -Maximum Loan Amounts -- Permanently increases the loan maximum on 504 loans, including public policy loans, to $5 million; small manufacturer and “green ” initiative loans are increased to $5.5 million. This means larger projects are now eligible for 504 loans and borrowers who already have loans with the SBA can now return for additional funding. -Temporary Alternative Size Standard -- Businesses with a maximum tangible net worth of not more than $15 million and average net income after Federal income taxes (excluding carry-over losses) for the two full fiscal years prior to application of not more than $5 million are now eligible for 504 financing. (Note: The temporary alternative size standard will remain in effect until the SBA publishes a permanent regulation.) -Debt Refinancing -- Establishes a temporary two-year program of business debt refinancing to be used for refinancing of qualified existing debt without business expansion into long-term, fixed-rate loans through the 504 program. This means small business owners holding commercial real estate loans with undesirable rates will have the opportunity to refinance these loans using the 504 program. This will be a boon for small businesses that are having difficulty keeping current on existing high-interest loans since 504 loans are currently available at very desirable rates. -504 First Mortgage Secondary Market Program -- Extends the sunset on the new temporary program for partial SBA guarantees on eligible pools of 504 first mortgages to be sold on the secondary market. The program will expire two years after the date the first pool sale occurs. Clearly, implementation of Small Business Jobs and Credit Act of 2010 (HR 5297) is a substantial and complex undertaking by the SBA that will require any number of regulation changes and policy notices. It is anticipated the SBA will swiftly implement the fee waivers; other provisions will take some time to implement. For more information about 504 loans in Florida, contact Florida First Capital by visiting www.ffcfc.com, emailing us at info@ffcfc.com or calling 888.320.5504.

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