LANSING, Mich., February 27, 2009 – The American Recovery and Reinvestment Act, recently signed by President Obama, will benefit the SBA 504 program in Michigan and provide new opportunities for businesses, according to the Michigan Certified Development Corporation (MCDC). The bill provides new opportunities for borrowers to refinance current loans and expand businesses, while also providing guarantees to lenders in the secondary market.
The stimulus bill allocates $375 million to temporary fee reductions or eliminations on all SBA loans, a portion of which will come to MCDC. When applied to an MCDC loan of $500,000, fee subsidies would save a borrower nearly $10,000. The bill also provides permanent changes to the program, now providing borrowers with the ability to refinance their current loan when an expansion project is financed. This change will help current borrowers expand their businesses and create jobs within their communities in order to boost Michigan’s economy. Additionally, to benefit lenders, the bill allows for secondary market expansion, providing a guarantee on “first lien” mortgages, encouraging lenders to continue participating in the SBA 504 program.
“This couldn’t happen at a better time for Michigan,” said Jane K. Sherzer, president of MCDC. “We are pleased that the stimulus bill provides opportunities for businesses across the state. These provisions will allow us to better serve our customers, providing them with additional financing options and fee reductions that will make business expansion more affordable, giving Michigan’s economy the boost it needs.”
Serving Michigan businesses since 1982, Michigan Certified Development Corporation is a nonprofit organization that utilizes the SBA 504 loan program to provide healthy small and medium-size businesses with long-term fixed-rate financing for the acquisition or construction of fixed assets. Projects are financed through a unique public/private partnership that involves private lenders financing 50 percent of project costs, MCDC/SBA covering up to 40 percent of project costs and small businesses investing at least 10 percent of project costs. This process reduces the amount of equity normally required of the borrower and it provides long-term fixed-rate financing. MCDC was named “Michigan Lender of the Year for 2006” by the U.S. Small Business Administration (SBA) – the first CDC in Michigan to receive such an honor. Visit MCDC at www.MichiganCDC.org.