Changing the rules

Permanent changes made to the U.S. Small Business Administration's 504 Certified Development Company loan program this summer may help small businesses looking to expand by restructuring eligible debt to improve cash flow, supporting growth and job creation.

Under the updated loan program, businesses can refinance existing loans used to buy real estate, fixed assets and expand current development projects. The changes to the program are a result of the American Recovery and Reinvestment Act of 2009.

The legislation allows 504 program projects to include a limited amount of debt refinancing if there is a business expansion and the debt refinanced doesn't except 50 percent of the projected cost of expansion.

Expansion includes any project that involves the acquisition, construction or improvement of land, building or equipment for use by the small business. The following are some of the conditions under which borrowers are eligible for refinancing:

  • The debt being refinanced was incurred to acquire land, construction a building or buy equipment.
  • The existing debt is collateralized by fixed assets.
  • The existing debt was incurred for the benefit of the small business.
  • The new financing provides a substantial benefit to the borrower when prepayment penalties, financing fees and other financing costs are taken into account.
  • The borrower was current on all payments of existing debt for a year prior to the date of refinancing.

More information is available at


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