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SBA Revamps 504 Loan Program
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Business New Haven
10/27/2003
By: BNH
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WASHINGTON, D.C. - The U.S. Small Business Administration (SBA) is modifying its 504 Certified Development Company Program to encourage creation of new lenders, expansion of the territories they serve, and ultimately improve delivery of the program to small businesses and further spur job creation.
The most significant changes affect the program's lenders, or Certified Development Companies (CDCs), and their organizational structure, as well as steps to form a new CDC or expand the territory of an existing one.
"We believe the new rules will make the 504 Program more responsive to changes in market conditions," said SBA Administrator Hector V. Barreto. "By allowing market-driven forces to determine availability of the program services, small businesses will have greater opportunities to negotiate the best financing packages as well as receive increased service by CDCs."
Changes include more flexible membership requirements for CDCs; greater authority to approve non-standard projects; expansion of the areas of operation to allow all CDCs statewide coverage; and elimination of rules requiring a minimum number of loans by each lender.
Demand for loans under the 504 Program has not reached the maximum budgetary authority for many years, although the program registered a record $3.16 billion in loans in the most recently completed fiscal year (the program's authorization maximum for the year was $4.5 billion). Created in 1986, the 504 Program provides long-term, fixed-rate financing to small businesses at favorable rates for fixed-asset financing as a means to foster economic development and create and preserve jobs in urban and rural areas.
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