Pub. 11 2021-2022 Issue 3

September • October 2021 15 penalties, financing fees, and other financing costs must be added to the amount being refinanced in calculating the percentage reduction in the new installment payment. The portion of the new installment amount attributable to “Eligible Business Expenses” will not need to be included in this calculation. “Eligible business expenses” are defined as operating expenses of the business that were incurred but not paid prior to the date of application or that will become due for payment within 18 months after the date of application. This includes accrued expenses such as salaries, rent, utilities, inventory, and other expenses of the business that are not capital expenditures. Current on all payments — eliminates the requirement that the borrower must be current on all payments due for not less than one year before the SBA application date. Because the qualified debt now must be incurred not less than six months before the date of the 504 Loan application, the SBA no longer requires that the applicant be current on all payments due on the Qualified Debt for not less than one year before the date of application. In accordance with prudent lending standards, the SBA expects the CDC to consider whether the applicant is current on all payments due and the applicant’s history of delinquency in its credit analysis. Reinstates an alternate job retention standard — all existing jobs measured on a full-time equivalent (FTE) basis can be counted as jobs retained by the refinancing project. For 504 debt refinancing WITH expansion: The amount of the existing indebtedness that may be refinanced as part of a 504 project is increased from not more than 50% to not more than 100% of the project costs of the expansion. All other existing policies and procedures for 504-debt refinancing with and without expansion continue to apply unless specifically modified by the interim final rule. Specifically, in the 504-debt refinancing without expansion program, the 20% cap on eligible business expenses and the maximum loan to value for projects involving eligible business expenses continue to apply. Contact one of the local Colorado CDC’s for more information.