She went on to say,
Mc Lean, VA (Vocus) October 3, 2009
NADCO, the trade association for the nation's CDCs prepared a written statement for the Committee with NADCO Chair, Jean Wojtowicz from Indiana Statewide CDC in Indianapolis, and Andre Fruge from Louisiana Capital CDC in Lafayette, LA participating on behalf of the CDC industry and NADCO.
Other participants included Tony Wilkinson, President/CEO of [NAGGL, Greg Clarkson, Executive Vice President of BBVA Compass Bank, Fred Crispen, Executive Vice President of Borrego Springs Bank and Eric Zarnikow, Associate Administrator for Capital Access at the SBA.
Jean Wojtowicz stated that the primary legislative goals of NADCO and the CDC industry are to assist many more small businesses by expanding the 504 program while reducing the regulatory burdens that hamper their access to capital. To this end, NADCO proposed expanding the existing maximum amount for a standard 504 loan from $1.5 million to $5 million. Andre Fruge cited a number of successful businesses in Louisiana that already had 504 loans and wanted to obtain additional 504 financing for further expansion. Louisiana Capital CDC was unable to assist them due to the cap of $1.5 million on 504 loans and, consequently, new jobs were lost for these Louisiana communities.
NADCO also recommended making lending to small businesses in low income areas a public policy goal, updating SBA rural area definitions to provide more loans to rural America, and authorizing the use of 504 loans for business acquisition through stock purchases.
NADCO pushed for supplemental funding to extend the 504 fee reductions provided by the Stimulus Act to keep the economic recovery going in the small business sector. Additionally, it was noted that SBA needs to implement the 504 first mortgage secondary market guarantee program required by the Stimulus Act to enable more community banks to utilize the 504 loan program.
Also, to provide much needed working and long-term capital to small businesses, NADCO proposed enabling 504 loans to be used to refinance qualified small business real estate debt, allowing “cash out” refinancing of existing real estate equity for working capital and also allowing small businesses to maximize loans from both the 504 and 7(a) loan programs.
NADCO once again reiterated that 504 loan recovery and liquidation efforts could be improved by funding existing SBA liquidation regulations to enable the CDC industry to increase focus and staffing for recovery of defaulted loan collateral.
In conclusion, Wojtowicz indicated that NADCO has not proposed a radical change in direction for the SBA 504 program, but rather ‘an incremental update and upgrade for a very successful capital access program that for over ten years has cost the American taxpayer nothing.” She went on to say, “ the pipeline” of 504 loan projects is beginning to return and that with rapid implementation of requested changes by the SBA, the 504 loan program will be just the right program at a critical time for small businesses.”
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.