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SBA Finalizes Rule Regarding Refinancing of Qualified Debt

The Small Business Administration has adopted as final, with changes, an interim rule ( 70,425.422) that amended SBA regulations to implement Section 1122 of the Small Business Jobs Act of 2010 (P.L. 111-240), which authorizes projects approved for financing under Title V of the Small Business Investment Act to include the refinancing of qualified debt. SBA's 504 Loan Program is a long-term financing tool for economic development that provides small businesses with long-term, fixed-rate financing to help acquire major fixed assets for expansion or modernization. The SBJA temporarily expands, for two years, the ability of a small business to use the 504 Loan Program to refinance certain qualifying existing debt. The interim final rule revised the existing 504 Loan Program rules at SBA 120.130, SBA 120.882, and SBA 120.884 to make them consistent with Section 1122 of the SBJA. As a result of comments received on the interim final rule, SBA 120.882 --Eligible Project costs for 504 loans, was changed to authorize the financing of business expenses as part of a refinancing project, to allow a Third Party Loan to be at least as much as the 504 loan instead of requiring that the Third Party Loan provide at least 50% of the financing, and to revise the definition of qualified debt. Other aspects of the interim rule were adopted without change. The effective date of the final version of the rule is October 12, 2011. For the text of the changes made to the interim final rule, and SBA's disposition of public comments, see 70,425.440.




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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