The Small Business Administration has set in place a plan that may allow small business owners to refinance their business’s mortgage to more affordable terms and this obviously could help a great number of companies who are having trouble meeting their commercial mortgage payment as many of these loans are due in a shorter-term, when compared to home loans for example, and with recent problems in not only private real estate ventures, many of these companies could stand to benefit from this refinancing opportunity.
Essentially, the SBA reports that loans within the administration’s 504 program may be available to take advantage of this refinancing opportunity as small businesses who are eligible for this program will get, reportedly, up to 70% of their loan refinanced with an approved lender and the remaining 20% from the SBA, which totals up to 90% of a property’s current value. It’s hoped that business owners who are allowed to qualify for this type of refinancing from the SBA will find a more stable and long-term solution to their business in the hopes of keeping jobs available, as this could lower monthly costs for businesses, and obviously could prevent businesses from simply going under due to the fact that they cannot meet financial obligations.
However, a recent story in the LA Times stated that rules for this program have yet to be released from the SBA, which has obviously caused what many feel to be a delay in a program that could be greatly beneficial for companies who are simply in a position where they are having trouble meeting their commercial mortgage payments. While this program is only set to be offered for two years, many worry that the delay in the rules for this refinancing opportunity could be the difference between numerous businesses either finding the aid they need to continue running and those who simply must fold as a result of operating costs and financial obligations being beyond their means to repay.
While private mortgages and commercial real estate loans greatly differ in many areas, many business owners are essentially having similar difficulties to men and women who are either in an underwater mortgage situation or who are having a problem meeting monthly payments on their mortgage obligations. Obviously, business has been slow in many areas and, as a result, these companies could greatly benefit from a break in their mortgage payment obligation, but again, until SBA rules are set in place, this program has been unhelpful to any companies thus far.
However, it’s believed that the program should be off and running this month as, again, it’s hoped the 2011 will be a year of growth for many businesses and, for those that may be teetering on the brink of bankruptcy, these refinancing plans could be greatly beneficial to not only keep these companies on a firm ground for the time being, but if the economy does begin to pick up, refinancing for more affordability could allow companies to simply stay in business and potentially profit from any economic prosperity that may be seen in the coming months.