The document summarizes the 504 Temporary Debt Refinance Program established by Congress in 2011. The program allows small businesses to refinance existing conventional debt into 504 loans to ease financial burdens. To qualify, the original loan must be at least 2 years old, 85% of original loan proceeds must have been for eligible expenses, and the application must be submitted before the September 27, 2012 deadline. The program provides benefits like consolidating multiple loans into one and does not require demonstrating improved cash flow.

1. 1
Summary
of
the
504
Temporary
Debt
Refinance
Program
Updated
4/9/12
In
the
fall
of
2011,
Congress
initiated
a
temporary
debt-­‐refinancing
program
to
allow
small
businesses
to
restructure
their
existing
conventional
debt
as
a
504
loan.
The
purpose
was
to
ease
the
burden
on
small
businesses
by
freeing
up
working
capital
and
releasing
funds
for
lenders
to
reissue
as
new
business
loans.
Though
Congress
is
currently
reviewing
a
proposal
to
extend
the
program,
as
of
now
the
program
will
end
on
September
27,
2012.
To
qualify
for
the
program
all
applications
must
be
complete
and
submitted
by
the
deadline
date
to
SBA.
Below
are
the
basic
qualifications
and
highlights
from
the
current
program.
Qualifications:
• Original
loan
must
have
been
made
2+
years
ago
• Loan
must
have
been
a
conventional
(non-­‐SBA)
loan
• The
third
party
lender
must
certify
that
they
are
not
in
a
position
to
sustain
a
loss
as
a
result
of
the
refinance
• Financing
can
equal
up
to
90%
of
appraised
value
or
100%
of
outstanding
principal
balance
• Borrower
can
have
no
payments
more
than
30
days
late
in
the
past
year,
unless
they
have
written
consent
of
forbearance
(permission
to
be
delinquent)
from
the
creditor
• Borrower
must
supply
previous
12
months
payment
history
• Though
appraisal
of
financed
property
is
not
required
at
the
time
of
application,
appraisal
must
be
provided
within
6
months
of
closing
• Borrower
must
currently
qualify
with
51%
of
occupancy,
even
if
not
occupied
at
time
of
original
loan
• 85%
of
proceeds
from
the
original
loan
must
have
been
eligible
504
expenses
(e.g.
land,
buildings,
equipment,
construction,
and
remodeling)
• Up
to
15%
of
proceeds
may
be
used
for
eligible
business
expenses
In
addition
the
borrower
must
submit
items
typically
requested
when
applying
for
an
SBA
loan
including,
but
not
limited
to
at
least
three
years
worth
of
signed
tax
returns,
description
of
the
purpose
of
the
loan,
and
detailed
descriptions
of
the
property
being
financed.
Special
Notes
• More
than
one
loan
may
be
combined
and
refinanced/consolidated
into
one
• SBA
proceeds
must
be
fully
disbursed
within
6
months
of
approval
• The
same
institution
which
originated
the
loan
can
also
serve
as
lender
for
refinancing
• Borrower
DOES
NOT
have
to
demonstrate
improvement
on
cash
flow
to
qualify
For
additional
information
on
the
Temporary
Debt
Refinancing
Program
you
may
visit
the
SBA’s
website
at
www.sba.gov
or
contact
5th
Gear
Consulting
at
210-­‐679-­‐4621
or
by
email
at
info@5thgearconsulting.com.

2. 2
“It
is
a
passion
and
insatiable
drive
to
assist
small
business
that
propels
5th
Gear
Consulting.”
Kara
Clayton
President,
Express
Metalwork
5th
Gear
Consulting
is
a
business
consulting
firm
specializing
in
SBA
loans,
strategic
planning
and
development,
and
commercial
real
estate.
Founded
by
Helena
Hauk,
the
SBA
San
Antonio
2011
Small
Business
Financial
Services
Champion,
5th
Gear
Consulting
has
facilitated
over
$60
million
in
SBA
loans,
resulting
in
significant
job
creation
and
growth
for
Central
Texas
businesses.
To
learn
more
about
5th
Gear
Consulting,
or
to
speak
to
your
area
representative,
visit
www.5thgearconsulting.com.
Put
Your
Business
Into
Overdrive!
5th
Gear
Consulting
1001
San
Pedro,
Suite
101
San
Antonio,
TX
78216
210-­‐679-­‐4621
info@5thgearconsulting.com
www.5thgearconsulting.com