June 2016 Lending Newsletter

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SBA 504 Debt Refinancing Program is Back!

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HCDC is now accepting applications for the refinance of commercial debt using the recently reinstated SBA Debt Refinance Program. The program can be used on eligible fixed assets that such as those that may have been originally financed with an SBA 504 loan, including land and buildings (whether constructed or improved), machinery, and equipment for the benefit of the small business. HCDC can begin submitting these applications to the SBA on June 24, 2016.

This is the time to refinance existing commercial debt. With the SBA 504 Program now at historic low interest rates, borrowers can lock in a low rate for twenty years. Even 504 borrowers who refinanced their 504 loan more than two years ago, can come back and use the 504 Debt Refinance Program.

For more information on the SBA 504 Debt Refinance Program, contact our Lending Team at 513-631-8292 or at loanapp@hcdc.com.

Other requirements for consideration include:
The borrower and the refinanced debt must have been in place at least two years before the date of the application for refinance
The borrower must have been current on all payments due for not less than one year preceding the date of application for refinance

  • The existing debt is collateralized by the assets being refinanced
  • The debt does not have a Federal Guarantee and is not the Third-Party Lender part of an existing 504 project
  • The refinance project must meet the job creation or other economic development requirements of the regular 504 Program
  • The refinance project does not involve an expansion or renovation of the project property

The amount of the 504 loan refinance project request and the Third-Party Lender loan cannot be more than 90% of the fair market value of the fixed assets that will serve as collateral. If the total refinance debt is less than 90% of fair market value, refinance proceeds may also be used to “cash out” to cover other eligible business expenses, such as salaries, rents, utilities, inventory, or other business obligations of the business, that were incurred but not paid, or will become due for payment within eighteen months of the application.

What is the Economic Development Requirement for an SBA 504 Loan?

All SBA (Small Business Administration) loans are awarded to borrowers with the requirement that they create a certain number of jobs. Typically that number is one job per $65,000 in loans, or $100,000 for a manufacturing firm. But there are other ways to satisfy the economic development requirement. HCDC Vice President of Lending Andy Young describes them in this short video…

[youtube id=”SKZPASprl1Q” mode=”normal”]

Weekly Market Commentary By SBA 504 Fiscal Agent Frank Keane

May 31, 2016: Following up on the release of the minutes from the Fed’s April meeting, Janet Yellen last Friday affirmed the Committee may be ready for a rate increase this summer. While still historically low, ten-year rates have pushed above their 50-day Moving Average as the market prepares for a June, or possibly July move. Probability of a June increase has risen to 34% while a July move is estimated to be at 62%. (More after photo.)

Weekly Market Commentary 5-31

All comments regarding a rate increase are hedged by emphasizing continued strong, domestic economic data and improving global conditions. The domestic releases start this week with Tuesday’s Personal Consumption Expenditure report that is expected to show a strong increase, though a smaller one of about 0.2% in the Fed’s preferred core calculation. That is followed by Friday’s Non-Farm Payroll report that is expected to repeat April’s disappointing number of 160,00 but may reflect a reduced rate of unemployment, to 4.9%.

Analysis of these reports might be provided by Chairwoman Yellen in a June 6 speech in Philadelphia and that will affect Treasury prices and our June debenture sale, scheduled for June 9. The next FOMC meeting is June 14-15, with a policy statement released at its conclusion.


SBA 504 Loan Rates

4.19% – 10-Year Debenture

4.232% – 20-Year Debenture


Loans Funded This Month

Grassworks Landscaping, Inc.

$464,000 Project Cost
$194,000 SBA Loan

RiverHills Bank




HCDC Borrowers in the News

Moerlein Launches Over-The-Rhine Cider Co.

Listermann Getting Taproom Restaurant

    Dan Listermann


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