SBA 504 Loan Fee Relief to Continue if Administrator Mills Prevails

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When a business uses an SBA 504 loan to invest in a larger facility, it always results in new jobs for the community, and we all realize that creating jobs should be the primary focus right now.

Mc Lean, VA (Vocus) November 16, 2009

NADCO, the trade association for the nation's Certified Development Companies (CDCs) that provide SBA 504 loans to America’s small businesses, applauds the on-going efforts of the Obama Administration and the Small Business Administration (SBA) to assist small businesses survive the current economic challenges.

SBA Administrator, Karen Mills, reiterated her commitment to making access to capital for America’s small businesses a priority in a statement released November 11, 2009. With the $375 million appropriation that has been used to offset fees for SBA 504 loans likely to be exhausted in December, Administrator Mills stressed that the SBA and the Obama Administration are working closely with Congress to obtain funding to continue the fee reduction through February 17, 2010 - a full year from the signing of the American Reinvestment and Recovery Act (ARRA) of 2009.    

SBA 504 loans are used by small business owners who want to purchase commercial real estate for their business operations, construct new facilities, or invest in long-term capital assets. In order to qualify for an SBA 504 loan, a business must demonstrate that their loan, and the resulting real estate purchase or construction project, will create or retain jobs for the small business. NADCO President, Chris Crawford pointed out, “When a business uses an SBA 504 loan to invest in a larger facility, it always results in new jobs for the community, and we all realize that creating jobs should be the primary focus right now.”

Administrator Mills cited that the average weekly loan volume for SBA loans has increased by 75 percent since February 2009. NADCO Chair, Jean Wojtowicz, commented, “Removing barriers to small business expansion should remain the focus right now, and reinstating fees will definitely slow down the current momentum.” The SBA 504 loan program has funded nearly $40 billion in loans to expanding small businesses over the past 23 years, and these loans have resulted in the creation or retention of over 2.2 million jobs.

Crawford maintained, “If a small business owner is currently on the fence about whether to invest in new or improved facilities, knowing that loan fees will return on February 17, 2010 is a real incentive to make a decision now. It will be a win-win for the small business and the community that gains new jobs.”

Administrator Mills statement also included information on an “ARRA Transition Plan” for transitioning back to pre-ARRA terms on SBA loans. A Recovery Loan Queue will be created that will utilize any loan funds that were not disbursed during the ARRA term. The Recovery Loan Queue will go into effect on the transition date and will allow eligible small businesses to choose to be placed in the queue for possible approval for an ARRA loan if funding becomes available. Crawford commented, “It’s clear that SBA’s intent is to stretch the ARRA funds as far as possible, and we support the Administration’s goal of effectively utilizing all Congressionally appropriated funds to assist small businesses.”

Any business owner considering expanding, should contact a Certified Development Company and ask about the SBA 504 loan program now. There is just no better deal available for the purchase of real estate or for expansion of existing facilities. Crawford went on to say, “Our CDC members are working hard with our bank partners, and we have money available for sound, small business expansion projects."

About the National Association of Development Companies (NADCO):

Created in 1981, the National Association of Development Companies is the trade association for America’s Certified Development Companies (CDCs). Certified by the U.S. Small Business Administration, CDCs are community-based economic development organizations that serve their local communities and states, and are dedicated to the promotion of small business expansion and job creation through SBA’s 504 Loan Program. In addition to the 504 program, many CDCs also provide small businesses with access to other Federal, state and local economic development loan programs. These programs provide both long and short term funding for borrowers.

Based in the suburbs of Washington, D.C., NADCO provides legislative and regulatory support for the 504 Loan Program on behalf of CDCs, the program’s lending partners (including first mortgage lenders, attorneys and others allied to the industry), and 504 small business borrowers. For more information, please call (703) 748-2575 or visit http://www.nadco.org.

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