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TEMPORARAY 504 DEBT REFINANCING LOAN PROGRAM

SMALL BUSINESS JOBS ACT of 2010. TEMPORARAY 504 DEBT REFINANCING LOAN PROGRAM. NAR, May 16, 2012. Today’s Program. Agenda Temporary 504 Debt Refinance Loan Program Permanent 504 Loan Program Basic Program Permanent 504 Refi Program

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TEMPORARAY 504 DEBT REFINANCING LOAN PROGRAM

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  1. SMALL BUSINESS JOBS ACT of 2010 TEMPORARAY 504 DEBT REFINANCING LOAN PROGRAM NAR, May 16, 2012

  2. Today’s Program Agenda • Temporary 504 Debt Refinance Loan Program • Permanent 504 Loan Program • Basic Program • Permanent 504 Refi Program 504 Portfolio: 56,677 loans, $23.8 B in 504 loans; $53.5 Bin total project financing outstanding!

  3. TEMPORARY 504 DEBT REFINANCE LOAN PROGRAM What is it for? • To refinance owner-occupied commercial property and equipment (not already government guaranteed) • Debt must be at least two years old • Can finance up to 90% of current appraised value • With sufficient equity, other businesses expenses and debt can be financed

  4. TEMPORARY 504 DEBT REFINANCE LOAN PROGRAM (CONT’D) • Works like regular 504 • Equity in other fixed assets can be pledged to increase the financing • Lock in long-term, low fixed-rate financing for working capital as well as real estate (about 5% or less) • Must be current (on agreed upon terms the past 12 months Expires September 27, 2012

  5. EXAMPLE CASE STUDY #1 • Refinancing Using Equity in the Property • Appraised Value of Property $1,400,000 • Outstanding Balance of Debt $1,260,000 • 90% LTV $1,260,000 • First Mortgage Loan $700,000 • SBA 504 Loan $560,000 • Borrower Equity Contribution $140,000 Borrower uses equity in property to lock in 44% of debt at long-term, low fixed-rates

  6. Maximum Working Capital • Appraised Value of Property $1,400,000 • Outstanding Balance of Debt $1,000,000 • 90% LTV $1,260,000 • First Mortgage Loan $700,000 • SBA 504 Loan $560,000 • Borrower Equity Contribution $140,000 • Proceeds for Working Capital $260,000 EXAMPLE CASE STUDY #2 Borrower benefits from lower cost working capital and 44% of debt at long-term, low fixed-rates

  7. Other Collateral Added • to the Deal to Maximize SBA Debt • Appraised Value of Property $ 800,000 • Outstanding Balance of Debt $1,000,000 • Appraised Value of Other • Pledged Collateral $ 600,000 • 80% of Total LTV $1,120,000 • First Mortgage Loan $560,000 • SBA 504 Loan $560,000 • Borrower Equity Contribution $280,000 • Available for Working Capital $120,000 EXAMPLE CASE STUDY #3 • Borrower gets: • - 50% of their debt fixed • to refinance an underwater loan • working capital

  8. Resources For more information about the Jobs Act 504 Debt Refinance Program contact: jobsact_debtrefinancing@sba.gov To find a SBA Certified Development Companies that service you area : • Contact the nearest SBA SBA District Office • www.sba.gov Or: Linda Reilly, Financial Analyst 202-205-9949 linda.reilly@sba.gov

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