The refinance provision of the U.S. Small Business Administration (SBA) 504 loan program allows small business owners to refinance commercial mortgages with longer-term, below-market, fixed interest rates afforded by the SBA 504 program. The First Mortgage Lien Pooling (FMLP) program creates a secondary market where lenders can re-sell a portion of SBA 504 first mortgage loans, allowing them to increase their liquidity and capacity to make more small business loans.
These two threatened initiatives significantly expand the benefits of SBA financing for small businesses and are in high demand as many small businesses wouldn't be able to obtain financing without them. SBA 504 refinances accounted for 14.7 percent of all SBA 504 loans made in the first quarter of 2012, and 20.6 percent of total SBA 504 dollars during that time period. Nearly 15 percent of all SBA 504 loans made today are FMLP loans and these loans are virtually the only outlet for what are classified as “special-purpose” owner-occupied property types.
The SBA 504 program, which helps small business owners acquire or develop their commercial property, has historically been a zero-subsidy program. It has been a fee-supported program, meaning that no tax dollars were required to keep it running. Loans made under this program have helped create hundreds of thousands of U.S. jobs, and if viewed over its lifetime, it has been one of the most cost-effective economic development programs ever created by the U.S. government.
Established by the Small Business Jobs and Credit Act of September 2010, both programs were subjected to severe bureaucratic delays — 14 months for the refinance program and 19 months for the FMLP program — which hampered their use and impact. To let these programs expire on September 27, 2012, as they continue to gain momentum and meet the small business credit marketplace needs, would be unwise and irresponsible. Both of these temporary SBA 504 loan programs have been scored as “budget-neutral” by the CBO due to their supplemental fees.
We encourage your support of this petition to get Congress to extend these beneficial, budget-neutral programs for at least one more year, in congruence with the spirit of the law that created them.