Small businesses will again be able to use Small Business Administration loans to refinance mortgages and loans on real estate and some types of equipment. The SBA has issued regulations that allow the loans — previously available only to buy, expand or improve property — to be used to refinance existing debt. The agency will begin accepting applications on June 24.
The so-called 504 loans, named for a section of the federal law that authorizes them, are given to small businesses that don’t have other sources of financing. Companies need to be healthy enough to make payments on the loans out of their cash flow. The loans can be used for buildings, land and machinery and equipment expected to be used over a long term such as some manufacturing machines or farm equipment.
Congress allowed 504 loans to be used for refinancing in the aftermath of the recession to help give small businesses more money to hire new workers, but that permission expired in 2012. Congress made them available for refinancings permanently in a law passed last December but the SBA was required to issue rules to implement the loans. Those were issued Thursday.
Companies must apply to banks or other SBA-approved lenders to obtain the loans. Some lenders are already accepting applications for 504 refinancings. More details about the 504 program, including eligibility requirements, as well as information about other SBA loan programs, are available at the agency’s website, www.sba.gov
Entrepreneurs come up with ideas to start businesses, but many don’t know how to turn a concept into an actual company. SCORE, the organization that gives free counseling to small businesses, is sponsoring an hourlong online seminar on startups. That will be Tuesday, June 7 at 1 p.m. Eastern time. Learn more and register at http://tinyurl.com/howhv37