An estimated $700 billion in commercial mortgages is set to reach maturity over the next few years, and many of these properties have declined significantly in value. This represents a ticking time bomb that could put these companies at substantial near-term risk.

But there’s some good news for these businesses and their banks: A new program took effect earlier this year allowing many of them to refinance existing commercial mortgages via the SBA’s popular 504 loan program.

Through the SBA 504 Debt Refinance Program, qualifying small businesses, professionals and commercial realtors can refinance up to 90 percent of the current appraised value of the property, or up to 100 percent of the outstanding principal, whichever is lower (plus 504 refinancing fees). The temporary program runs from February 28, 2011, through September 27, 2012. This program could be a lifesaver for thousands of small business borrowers. It enables banks to provide a viable refinancing option for borrowers that could face foreclosure if unable to refinance or restructure existing commercial mortgage debt. Note: The program does not allow cash-out refinancing.

The business size standards for this program are higher than they are for traditional SBA 504 loans: Businesses with tangible net worth of up to $15 million and two-year average net income of up to $5 million may qualify. Also, the maximum 504 loan amount has been permanently increased to $5 million (or $5.5 million for small manufacturers and energy loans). For borrowers who qualify, the SBA 504 Debt Refinance Program will provide the security and peace of mind that come with locking in a long-term, fixed-rate mortgage at below-market rates. And for banks, the program helps lower risk exposure on commercial real estate, ease regulatory pressures, strengthen balance sheets and free up lending availability.

It also presents a unique marketing opportunity to attract new borrowers who could benefit from the program. We can help you decide if SBA refinancing is right for you.