A push is on in Congress to reinstate a program that allowed small businesses to refinance commercial mortgages using government-backed funds.
House and Senate lawmakers have introduced bills that would restore the program, which enabled eligible small businesses with a mortgage that it is at least two years old to refinance their obligation via the Small Business Administration's Section 504 loan program regardless of the loan's maturity date.
The program, which was one of several federal aid measures offered after the financial crisis hit, enabled borrowers to restructure real estate debt or tap equity in their property for business purposes.
It expired in September despite several attempts by Sen. Mary Landrieu, D-La., who heads the Small Business and Entrepreneurship Committee, to extend the program. Landrieu introduced legislation in February with committee member Sen. Jeanne Shaheen, R-N.H., that would revive the program for five years. "Extending the 504 refi program is a commonsense way to help small businesses and create jobs without costing taxpayers a single penny," Landrieu said in a press release that accompanied the bill's introduction.
On Monday, Rep. Judy Chu, D-Calif., a member of the House Small Business Committee, introduced a similar measure that has attracted eight co-sponsors. The bill will "ensure that small business owners have the capital they need to invest in their own success," Chu said in an emailed statement.
In the program's last fiscal year, the SBA approved roughly 2,400 refinancings that let borrowers access more than $2.2 billion in capital, according to the Senate panel.
At a hearing on March 14, Landrieu and her colleagues heard from Ralph Hardt, the owner of a manufacturing company in Wisconsin, who used the refinance program to tap $5 million from the company's buildings to help fund its operations. "With the SBA program, we were allowed to use our excess capital and our assets and basically refinance that debt into a long-term stable interest rate position," Hardt said. "The program truly got us going after the great recession."
Jeanne Hulit, the SBA's associate administrator, told senators the Obama administration backs the program, which Hulit termed "very successful."
Landrieu hopes to hold a committee vote on the measure by summer and will urge Senate leaders to bring the bill to the floor afterward, according to her staff.