The Small Business Jobs and Credit Act of 2010 provides welcome relief for business owners needing to refinance their commercial real estate mortgages secured before the recession. A Congressional Oversight Panel report was released in 2010 that found loans made over the last decade – including retail properties, office space, industrial facilities, and hotels – totaling $1.4 trillion will require refinancing in 2011 through 2014. Nearly half are at present “underwater,” meaning the borrower owes more on the loan than the underlying property is worth. While these problems have no single cause, the loans most likely to fail are those made at the height of the real estate bubble. The Panel noted, however, “Even borrowers who own profitable properties may be unable to refinance their loans as they face tightened underwriting standards, increased demands for additional investment by borrowers, and restricted credit”.
A significant wave of commercial mortgage defaults would trigger economic damage that could touch the lives of nearly every American.” The SBA 504 Refi is designed to address this problem with the objective of stabilizing expenses for business owners and assisting banks serve their community better. Through the SBA 504 Refi, a lender refinances a portion of the loan while the SBA guarantees the rest. This creates a win-win situation – giving small business owners and option to refinance at a solid rate that is set for 20 years and gives lenders the opportunity to get back to making loans! For more information on the 504 Refi – go to visit www.cdcloans.com or check outTHIS OVERVIEW.
– By Mike Owen, Chief Operating Officer at CDC Small Business Finance