U.S. Senator Mary L. Landrieu (D-La.), chair of the Senate Committee on Small Business and Entrepreneurship, and Senator Jeanne Shaheen, (D-N.H.), a senior member of the committee, have introduced legislation that would extend for five years a provision allowing small business owners to use Small Business Administration (SBA) 504 loans to refinance certain existing commercial mortgages.
The Commercial Real Estate and Economic Development (CREED) Act, originally enacted as part of the Small Business Jobs Act of 2010, did not become fully operational until February 2012, significantly shortening the period of time that businesses could use 504 loans to refinance qualifying existing debt. It expired on September 27, 2012.
“Extending the 504 refi program is a common-sense way to help small businesses and create jobs without costing taxpayers a single penny,” said Sen. Landrieu. “By allowing small businesses to refinance qualified commercial real estate debt, this program lowers their monthly mortgage payments at no cost to taxpayers. At a time when we are still facing high unemployment, this extension is one of many things that we should be doing to put more capital in the hands of America’s job creators.”
“This bill provides a smart, effective way to give small businesses access to historically low interest rates and cost stability that will help them expand and add jobs. Small businesses in New Hampshire and across the country need access to capital and this bill accomplishes that goal at no cost to taxpayers,” said Sen. Shaheen. “Last year I was proud to bring New Hampshire small business leaders to Washington to give first-hand accounts on the necessity and importance of this type of program, and this year, I’m hopeful we can give this program the consideration it deserves.”
The 504 loan program is a long-term financing tool for economic development that provides small businesses with long-term, fixed-rate loans to help them acquire major fixed assets for expansion or modernization. Certified Development Companies (CDC) work with the SBA and private sector lenders to provide financing to small businesses under the program. A CDC is typically a private, nonprofit corporation set up to contribute to the economic development of its community.
In fiscal year 2012, the program’s second and final year, the SBA approved more than 2,400 refinancings for over $2.2 billion to small businesses.