this increase in the loan cap for our borrowers will allow many more successful small businesses to continue to expand and add jobs in their communities. There is no better way to improve our national economy than to support the expansion of our country’s successful small businesses.
Mc Lean, VA (Vocus) October 22, 2009
Obama, speaking at the offices of Metropolitan Archives, an SBA 504 loan recipient, announced that government-guaranteed loans made to America’s small businesses through the SBA 504 loan program should be made available for up to $5 million in financing – up from $1.5 million. The loan limit for small manufacturing businesses should also be increased from $4 million to $5.5 million.
Metropolitan Archives received an SBA 504 loan earlier this year to purchase a building at the maximum loan amount allowed. The company recently returned to Chesapeake Business Finance Corp., the CDC that provided their first 504 loan, and requested an additional loan for continued expansion. Today’s announcement means they should soon become eligible to apply for a second loan to continue growing and increasing employment in their community. John Sower, President of Chesapeake Business Finance Corp., who was present at yesterday’s event said, “This change would mean we will be able to work with Metropolitan Archives again to keep a successful small business growing and creating more jobs.”
NADCO testified before both the Senate and House Small Business Committees several times this year requesting an increase in lending limits for the 504 loan program. CDCs across the country have been hearing from small business owners looking for financing who are unable to obtain an SBA 504 loan due to the cap of $1.5 million on their businesses. In many cases, these small businesses had already used an SBA 504 loan, they were ready to expand, but were denied the chance to borrow again through the SBA due to the $1.5 million limit.
Jean Wojtowicz, chair of the NADCO Board, says "Raising the ceiling on SBA 504 loans to $5 million is a big step toward bringing more job creation money to Main Street. Small businesses provide face-to-face services, they are idea factories and they create jobs. SBA loans are investments in their future and in America's future, and they come at zero cost to taxpayers."
SBA 504 loans provide long-term, fixed rate financing for commercial real estate and capital assets at interest rates normally below those available from banks. The SBA's lending partners, CDCs, work with small business borrowers to obtain 504 loans for up to 40% of project, a financial institution provides a first mortgage for 50% of the project and the borrower typically contributes as little as 10% down payment.
Chris Crawford, NADCO President, who was also present at the event, noted that "this increase in the loan cap for our borrowers will allow many more successful small businesses to continue to expand and add jobs in their communities. There is no better way to improve our national economy than to support the expansion of our country’s successful small businesses.” He went on to say, “We applaud the administration for their continued efforts to increase small business access to capital.”
The SBA 504 loan program has funded nearly $40 billion in loans to growing small businesses over the past 23 years.
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.