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 Economic Council Welcomes Steve Grelle________
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 Hi, I'm Steve Grelle, business development officer for St. Louis County Economic Council's Business Finance Division. I'm excited to be part of the Economic Council's vision to help the region's small businesses grow.
We offer unique and collaborative loan programs like BOOST and SBA 504, and partner with local banks to reduce their risk and provide their customers with attractive terms and greater opportunity. If you have a question about how the Economic Council's collaborative approach to small business financing can help you or your client's business, don't hesistate to ask.
In addition, I will forward monthly rates for SBA and BOOST and continue to send quarterly newsletters to update you on industry news.
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SBA 504 Fee Waiver _________________________ |
You may have heard that the SBA 504 fee waiver program, which eliminates guarantee and application fees, was extended to March 4, 2011. However, funds have already been exhausted, and unless renewed, the fees will return to approximately 2.5 percent of the loan.
Although the fees will no longer be waived, the SBA 504 loan program remains an attractive option for the purchase of fixed assets. It allows business owners to borrow up to 90 percent and secure a 20-year, fixed-rate loan at very low rate. For example, the SBA 504 rate for a 10-year loan, even with all fees included, is comparable to a bank's three-year rate; and the rate for an SBA 504 20-year loan is similar to a bank's five-year rate.
Additionally, the 504 program is ideal for mitigating a bank's lending risk, since the bank's requirement is only 50 percent loan-to-value on owner-occupied real estate or equipment.
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SBA Refinance Provision ______________________ |
Mid-January, the SBA will release its official standard operating procedures for the 504 loan refinance provision. The new provisions provide opportunity for small to middle market business owners to refinance their owner-occupied commercial real estate loan in to a long-term, low fixed-rate loan with no balloon payment.
The new provisions will likely include:
- Ability to refinance existing 504 eligible debt for up to 90 percent of the appraised value of the property (if owned over two years) or purchase price (if owned less than two years). Borrowers likely will have to prove that the original balance was for 504-approved purposes.
- The business debt likely will have to be current - no late payments greater than 30 days for at least the previous 12 months.
- The debt likely will have to be older than one year.
- Although improbable, there is debate about allowing the refinance of lines of credit.
We encourage you to begin the application process now. Many applications for the refinance provisions are expected, and if begun now, the application can be completed upon release of the standard operating procedures.
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