A MID-YEAR LOOK AT THE SBA
A MID-YEAR LOOK AT THE SBA
Having a new administration in place historically means that changes will be enacted to align with new priorities. With the election several months behind us, we want to make you aware of some shifts to the SBA 504 program that have recently been finalized. If you have applied for an SBA 504 loan in the past, things may look a little different now, and some changes in the program present opportunities for certain sectors. For all clients, first time and returning, SBA 504 financing remains a solid solution for growing your company and we look forward to helping you do just that.
Reinstatement of Franchise Directory – If your business is operating under a franchise or similar agreement it must be listed in the SBA Franchise Directory to qualify for SBA 504 financing. Use of this directory was suspended in 2023 but had the unintended effect of creating confusion with franchise loans. Reinstating the directory is a positive move for applicants, lenders and franchises.
U.S Citizenship Requirements – Historically, applying businesses needed to have at least 51% ownership by U.S. citizens, U.S. nationals, or lawful permanent residents (LPRs) to qualify for SBA financing. That requirement has shifted to 100%, which means partial foreign ownership of the business is no longer an option.
Priority for Veterans – Veteran-owned businesses, this is great news for you! Your SBA 504 loan applications will be given priority, which can result in a faster path to funding. Learn more about Bay Area Development’s participation in – and the advantages of – the SBA 504 Vet Loan Advantage Program here.
Demonstration of Creditworthiness – SBA is placing a stronger focus and emphasis on traditional credit factors including cash flow and borrower equity. This reduces potential risk to the SBA’s lending programs and ensures they remain accessible to creditworthy companies.
SBA 504 Refinance Update – SBA 504 Refinance is a very popular program, allowing companies to refinance existing high interest loans and take advantage of the SBA’s favorable rates and terms. An applicant’s existing debt must now be current for 12 months, as opposed to the previous six-month requirement. If the debt to be refinanced is less than 12 months old, it must be current for its full term. Click here for more information about this program.
Demonstration of Creditworthiness – SBA is placing a stronger focus and emphasis on traditional credit factors including cash flow and borrower equity. This reduces potential risk to the SBA’s lending programs and ensures they remain accessible to creditworthy companies.
Energy Efficient Projects – Federal sustainability goals have been expanded, and the SBA is aligning its programs with those priorities. The SBA has reinstated the $16.5 million cap on total outstanding loans for Energy Efficient Projects.
Our team is always available to answer questions you may have about these specific changes or about the SBA 504 programs in general. We are here to be your small business resource and would be happy to talk with you!
