The Small Business Administration on Thursday launched a new $15 billion program to help entrepreneurs facing yearend balloon payments on their commercial mortgages.
The government estimates that up to 20,000 companies may benefit from the effort.
The program, which the agency said is temporary, allows business owners to refinance provided they have 10% equity in the property and they can bring a private sector lender to the table in a 50/40 split with SBA. (The effort is modeled after the agency's '504' loan program.)
SBA says a key feature of the new effort "is that it does not require an expansion of the business in order to qualify." It added that, "We are making this initial restriction to make sure our funding goes first to small businesses with the most need."
Congress authorized SBA to approve up to $15 billion in loans under the program with the money being split evenly ($7.5 billion) for fiscal 2011 and 2012.
The government says additional fees charged to the borrower will cover the cost of this refinancing program "and as a result no subsidy will be needed."
