Wakarusa Valley Development, a non-profit organization, partners with the U.S. Small Business Administration to meet the financing needs of growing small businesses throughout the state of Kansas.
We provide small businesses long-term, fixed-rate financing to acquire real estate and equipment through the SBA 504 Loan Program. Additionally, with our SBA 7(a) Loan packaging services we can help small businesses gain access to capital and assist area lenders in building relationships by meeting their borrowers’ needs.
Whether you are a small business owner or a dedicated Kansas lender, we will provide the right SBA lending solution for you.
Most people would agree, when prices are good it is a good time to buy. For the month of September, the effective rate on 504 loan is 4.08% fixed for 20 years and 4.28% fixed for 10 years. Rates have been consistently good for several months, yet these are the best rates we have seen in years.
The 504 loan product has been a main stay in economic development through fixed asset financing for years. The reason for it's success can partly be attributed to the key advantages it offers both borrowers and lenders.
The key advantages it offers borrowers include a low down payment, a low fixed rate (thus a hedge against rate fluctuations) and the inclusion of most soft costs. For the lender, the 504 loan product offers limited credit and concentration risk while still meeting their customers' needs. In addition, Wakarusa Valley Development will shoulder the underwriting and packaging of the loan!
Given these advantages and our current economic cycle, low pricing and mitigated risk go well together, don't you think? If you have a prospective project, give us a call. Let's keep our momentum in moving our community forward.
In our fast moving and competitive world, our daily computing needs have moved to our smart phones. Wakarusa Valley Development's website has the tools to assist you with your clients while you are on the go.
Picture this scenario:
You meet a client for lunch to discuss possible financing options for a new building for her business. As you discuss the project, you realize a 504 loan may be an option. You'd like to visually show her the 504 loan structure for her project. Rather than fumbling with pulling out your laptop, wait for it to boot up, connect to the WiFi, etc, you simply pull out your smart phone, click on your WVDI 504 Loan Calculator bookmark, enter a couple fields of data and viola! You have your 504 loan project structure to show her right on your phone in less than 30 seconds.
If you haven't been to our website for awhile, please pay us a visit. We strive to provide up-to-date information and the tools to better serve you and your clients.
As a reminder, if you have any questions regarding the recently reinstated 504 Debt Refinance Program please do not hesitate to give us a call or have us come out to give your team a presentation and answer any questions.
As we announced in December, SBA will permanently reinstitute the 504 Debt Refinancing Program. As promised, here are the new rules and requirements to the program:
What is the Debt Refinancing Program?
Under the program, small business will have the ability to restructure a portion of their debt at low fixed interest rates up to 20 years.
The Act made the following statutory modifications to the 504 Debt Refinancing Program:
- The 504 Debt Refinancing Program will be in effect only in any fiscal year in which the subsidy cost to the Federal Government of making guarantees under the 504 Debt Refinancing Program and under the 504 Loan Program is zero.
- Elimination of the alternative job retention goal authorized previously by the Jobs Act. Accordingly, all refinancing projects must satisfy the job creation and retention requirements that apply to any standard 504 project.
- The Borrower must have been in operation for all of the two year period ending on the date of application, as evidenced by the financial statements submitted at the time of application. If the ownership of the Borrower has changed, either partially or fully during the two year period, the Borrower is considered a new business and the Borrower's debt is not eligible for refinancing under the 504 Debt Refinance Program.
- Any refinancing under the 504 Debt Refinancing Program must include Qualified Debt, as defined below. In addition, as further described below, the refinancing may also include Eligible Business Expenses, including "Business Operating Expenses" and "Other Secured Debt".
- "Eligible Fixed Assets" are one or more long-term fixed asset, such as land, buildings, machinery and equipment, acquired, constructed or improved by a small business for use in its business operations.
- "Qualified Debt" means a commercial loan:
- substantially all (85% or more) of the proceeds of which were used to acquire an Eligible Fixed Asset. If the Eligible Fixed Asset was originally financed through a commercial loan that would have satisfied the "substantially all" standard and that was subsequently refinanced one or more times, with the current commercial loan being the most recent refinancing, the current commercial loan will be deemed to satisfy this requirement
- that was incurred not less than two years prior to the date of the application
- that was for the benefit of the small business seeking the refinancing
-that has been secured by the Eligible Fixed Asset for at least two years
- for which the borrower has been current on all payments due for not less than one year preceding the date of application. "Current on all payments due" means that no payment was more than 30 days past due from either the originall payment terms or modified payment terms (including deferments)
- the Qualified Debt may consist of a combination of two or more loans, provided that each of the loans satisfies the Qualified Debt Requirements.
- In addition to a cash contribution, the Borrower's 10% contribution may be satisfied by its equity in the Eligible Fixed Asset(s) serving as collateral for the Refinancing Project or by the equity in any other fixed assets that are acceptable to SBA as collateral.
- An independent appraisal of the fair market value of the project assets and any additional assets offered as additional collateral must be provided. This appraisal must be dated within six (6) months of the date of application.
Same Institution Debt:
- When the loan being refinanced is Same Institution Debt (bank debt) the Third Party Lender (loan lender) may modify its existing loan documents (Note, Deed of Trust/Mortgage, etc.) instead of requiring the Borrower to execute and record new loan documents for the Third Party Loan.
Other Than Same Institution Debt:
- When the loan being refinanced is not same institution debt, SBA may permit the lender of the debt to be refinanced to assign its existing loan documents to the Interim Lender and if an Interim Lender is used, or to the Third Party Lender if not Interim Lender is used. The existing loan documents may be modified, as appropriate, rather than requiring new documents executed for the Refinancing Project. The Interim Lender, if any, may then assign the documents to the Third Party Lender.
- No Refinancing of loans with an existing federal guaranty (e.g. a 7(a) loan or USDA loan).
- No refinancing of loans which is already part of an existing 504 project.
- No refinancing where the creditor on the debt to be refinanced is in a position to sustain a loss causing a shift to SBA or all or a portion of a potential loss from existing debt.
The Sacramento Loan Processing Center will begin accepting applications June 24, 2016.
We are very excited about the reinstatement of this program. Call us today to discuss potential projects that may be eligible for the 504 Debt Refinancing Program or to go over any questions you may have regarding this announcement.
Also, if you would like to schedule a bank presentation of those changes to the 504 Loan Program to your lending team, please let us know!