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What’s Happening with Debt Refi Legislation? Many of you have inquired about the return of the popular SBA 504 Refinancing program. We have the latest word from NADCO. The National Association of Development Companies (NADCO) is the trade association of Certified Development Companies (CDCs) - nonprofit companies that have been certified by the Small Business Administration (SBA) to provide financing for small businesses under the SBA 504 Program. Debbie Partin, NADCO Vice Chair of Legislative Affairs, recently shared is important update. "Many NADCO members are asking about pending legislation that would reinstate the popular Debt Refinance provisions of the Jobs Act of 2010. This provision helped 2,700 businesses refinance old, expensive debt and on the last day, 400 businesses had submitted loan applications that couldn’t be processed before it automatically sunset. Now “Debt Refi,” under an agreement by the chairman and ranking member of the Senate Committee on Small Business and Entrepreneurship, Senators Mary Landrieu (D-LA) and Jim Risch (R-ID), would become permanent in any fiscal year in which the regular 504 program is at a zero subsidy rate. For FY 2014, the program is at a 1.71 subsidy rate. NADCO has been working on a fee package that would eliminate that subsidy but so far we have not succeeded – the 1.71% subsidy rate requires huge fee increases to be eliminated. SBA has been working with us on this problem. We remain hopeful that in the coming weeks we will find an answer so that Debt Refi can be used in FY14. Absent that, we will have to wait until the President’s FY15 budget is released and the program’s subsidy rate for that year is established. The release should happen in February. We expect to see a significant improvement in the subsidy rate at that time as, from what SBA tells us, both the portfolio and program recoveries are improving significantly. Please continue to voice your support for Debt Refi to your members of Congress." In summary, the CDC industry is working aggressively to bring back debt refinancing through the SBA 504 program. The recent recession created an increase in defaults in SBA 504 loans and increased one of the program fees. NADCO is working with SBA to adjust the fees and bring the program back now that the economy is improving. Congress needs to know what we want. We have made it easy for you to voice YOUR support. Please click on the links below to find your Congressional delegation. Feel free to use this template (copy/paste), make it your own and send it to Congress. "I am writing to support legislation to return a pro-small business commercial real estate loan program to zero subsidy and to reinstate on a permanent basis a popular debt refinancing provision for small enterprises that had expired last year.
ABOUT THE CREED ACT Congresswoman Judy Chu (D-CA) has introduced the House version of the CREED Act (H.R. 1240), along with Congressman Tom Petri (R-WI).
ABOUT THE SBA’s 504 LOAN INITIATIVE Respectfully, [INSERT YOUR NAME AND CONTACT INFORMATION]" Please contact your local Senior Loan Officer, Aaron Shanks our Marketing Genius, Phil Eng our President Emeritus or myself if you would like more detail or assistance. We are all happy to help you in any way. Thank you for your partnership in helping small businesses grow. Sincerely,
Patti Kibbe Follow us on Twitter as Evergreen504.
Like us on Facebook. Visit us at www.evergreen504.com
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