SBA 504 LOANS Obama Supports Increase in SBA 504 Loans

Washington, D.C.
10/21/2009

President Obama today announced his support of legislation that will increase the cap on Small Business Administration (SBA) 504 loans to $5 million for standard small businesses and $5.5 million for small manufacturing businesses. 504 loan caps are currently set at $1.5 million ($2 million if a public policy is met) and $4 million, respectively.

The shift to $5 million for standard small business borrowers would support a total project of $12.5 million, and to $5.5 million for small manufacturers would support a total project of $13.75 million, according to the White House and the SBA.

While the legislation is pending Congressional approval, this is huge news for small business owners looking for financing who were unable to obtain a 504 loan due to $1.5 million cap. In many cases, these small businesses had already used a 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. 

SBA data shows an increase in the demand for the larger loans currently available. In the 504 program, the percentage of loans for more than $1.5 million has grown, from 15% of total dollars approved in 2005 to 28% in 2009. 

Obama made his announcement at the offices of Metropolitan Archives, a 504 loan recipient in Hyattsville, Maryland. With this kind of support from the president for the 504 industry, it is certainly hoped the legislation will be fast tracked and put into place by the SBA as soon as possible. 

The 504 loan program is reserved exclusively for the purchase, construction or renovation of owner-occupied commercial real estate and/or the acquisition of industrial equipment or other fixed assets. It offers below market, fixed interest rates with long amortization terms (up to 20 years). 

Over 115,000 savvy, small business owners have taken advantage of 504 loans to grow their businesses since the program began in 1986. In fact, the 504 loan program has funded over $45 billion in loans to growing small businesses over the past 23 years.

To read more, please visit http://www.bluemaumau.org/8065/obama_asks_sba_loan_expansion_franchisees....