New regulations will be published in the Federal Register, and while the heavenly choirs are not quite warming up for the "Alleluia Chorus", there is considerable joy in SBALand. Processing is tentatively scheduled to open on 28 February 2011.

That being said, "bad news" first:   

1. The limitation to loans ballooning by 31 December 2012, even with the promise of a review to expand the reach, is of little comfort with a two year program sunset which we are already some five months into. 
2. The strict interpretation of "current" excluding performing, but deferred or restructured loans will create distinct limitations for program utilization in some of the worst hit markets.

And that is a pretty short list of "bad news". All things considered, given SBA's need to manage the risk of "loss shifting" and the desperate need for this program in many parts of the country, there seems to be ample "good news".

For more details on the initial review of this, dare we say Revolutionary change in the 504 program, visit the links below for a summary document of all major provisions and examples of specific refinancing situations. 

• Summary of 504 Jobs Act Debt Refinance Provisions 
• Example of 504 Jobs Act Debt Refinance  
• For more information visit IDS Corp   

Nowhere is seller financing, also called seller carry-back financing, more prevalent than in the sale of small and lower middle market businesses. To begin this presentation, let's look at the distribution of the percentage of the purchase price buyers pay in a down payment. Figure 1 presents this data from the 2010 edition of the Bizcomps database. The 2010 edition of Bizcomps includes data for the years 1995 through 2009.

From Figure 1 we see that in 39.2% of the transactions, the seller received all cash at closing. In a very significant percentage of these transactions however, the buyers obtained third-party financing, primarily via SBA 7a loans. Although it is impossible to know exactly what percentage of the all-cash-at-closing transactions were partially financed by a third-party lender, the point of this first presentation is to show that in 60.8% of all transactions, the seller partially financed the purchase price. The other two elements of seller financing is the distribution of the interest rates these notes carry and the amortization periods. Figure 2 shows the distribution of interest rates and Figure 3 shows the distribution of amortization periods.