From time to time DDIFO is pleased to present Guest Commentary from valued contributors. Guest commentaries feature the views, and opinions of the contributor and are not necessarily the opinions of DDIFO and it’s Board of Directors. The following is information submitted by Barbara Arena, Vice President of Granite State Development Corporation (GSDC) 131 Whitman Street, Hanson, MA 781-294-2244,,, regarding refinancing opportunities thru the SBA’s Temporary 504 Loan Refinancing Progam

Market research shows that a large percentage of commercial mortgages outstanding are set to mature within the next few years, particularly those held by community banks.  As real estate values have declined, however, even small businesses that are performing well and making their payments on time can have a hard time refinancing these loans and may need to restructure their debt.  Also, public comments and the Small Business Jobs Act tour identified that access to working capital is currently the biggest credit gap in the marketplace.  This is even true for businesses with equity in their properties.

Under the Small Business Jobs Act, the SBA has implemented a temporary program—authorized until September 27, 2012—allowing small businesses to refinance eligible fixed assets in its 504 program without requirement of an expansion. This program provides small businesses the opportunity to lock in long-term, stable financing, and finance eligible business expenses as well as protect jobs and hire additional workers.  Key program changes were made in April 2011 and with the issuance of a final rule, effective October 12, 2011.

Typically, a 504 project includes three elements:

a loan (or first mortgage) secured with a senior lien from a private-sector lender covering up to 50 percent of the project cost, a second mortgage secured with a junior lien from an SBA Certified Development Company (backed by a 100 percent SBA-guaranteed debenture) covering up to 40 percent of the cost, and a contribution of at least 10 percent equity from the small business borrower.

GSDC is a SBA Certified Development Company and is New England’s largest participant in the Small Business Administration (SBA) 504 loan program and #4 Nationally. 

Barbara is responsible for developing business primarily in Massachusetts but is also authorized to work on projects in Maine, New Hampshire and Vermont.  She brings 25 years of SBA lending experience, including a variety of other credit enhancement loan programs.  She has extensive experience in structuring financing, particularly for complex transactions.  Prior to joining GSDC she was with CIT Small Business Lending for 16 years and led a team of 12 sales people throughout the Northeast and managed franchise relationships including Dunkin Brands.

Barbara is involved in many organizations including: National Association of Government Guaranteed Lenders (NAGGL), serving as the Regional Chairperson for the past 3 years; New England Franchise Association (NEFA), Past Board Member and Treasurer;  New England Business Brokers Association (NEBBA),  Board Member and recently nominated Vice President for 2012;  Realtor’s Commercial Alliance of Massachusetts (RCA-MA), Affiliate Board Member; and Plymouth Chamber of Commerce, Member.

Barbara identified the highlights for Dunkin’ Donurs Franchise Owners of the “Temporary 504 Refinance Program”: This program expires September 26, 2012 unless Congress extends.

Temporary 504 Refinance Program

  • Allows for refinancing of existing debt and cash out for eligible business expenses up to 90% LTV
  • At least 85% of the ORIGINAL use of proceeds must have been for an eligible 504 purpose (i.e. purchase real estate, construction etc.).   If the original loan has been refinanced multiple times, it is only the original loan that must meet this requirement.
  • Eligible Business Expenses can now be included in project financing.  Expenses must be incurred, but not paid prior to the date of application or will become due within 18 months of date of the application.  Ex:  Repairs, renovations and equipment purchases as well as Rent/Leases, Utilities, Inventory, Payroll, other Working Capital
  • Property appraisal within 6 months is required as a condition of approval (but is not required up front).
  • The debenture must fund within 6 months from approval date, so improvements should be kept to a minimum.
  • This is a great program for franchisees looking to refinance their existing debt, make minor improvements, purchase equipment etc.
  • There are no special “hoops” if refinancing with existing lender beyond transcript history, which is all handled by the bank.
  • NO Additional equity requirement for special purpose properties (business must be in operation for 2 years)
  • The effective rate for the refinance program as of the March 2012 debenture sale was 4.76% fixed for 20 years!

Traditional 504 Program:

  • Up to 90% financing for purchase/construction of real estate and or equipment with useful life of 10 years or more.
  • Paperwork needed is less than Bank’s require (1 year personal; 2 years business) and most fees can/are rolled into the loan.
  • Additional 5% equity required for special purpose properties and/or new business (no historical operations, including affiliates for prior two years) – 5% for each up to 20%

Both programs require bank participation.  Bank term must be at least 10 years and on reasonable terms, but they are in first position.  In the case of the refinance program, 10% Borrower is contributed via property equity.


  • 20 year fixed rate for real estate was 4.59%
  • 10 year fixed rate for equipment was 3.40%



Frequently Asked Questions: FAQ 504 Temporary Loan Refinancing Program

   Contact: Barbara Arena for more information and to discuss your qualifications: 781-294-2244,