SBA 504 Cheat Sheet: COVID Relief/Stimulus Bill

February 5, 2021

Are you a banker or broker that refers clients to the SBA 504 Loan?

Your CDC Small Business Finance SBA 504 team has identified key information and benefits of the new Covid Relief/Stimulus Bill to help you stay informed.  We have read through all the details and, as always, we are committed to helping you stay up to date on the provisions that relate to the SBA 504 program and matter for you and your clients.

 

CLICK TO DOWNLOAD OUR COVID BILL CHEAT SHEET

Get a Head Start on the Opportunities Ahead:

  • Attract deals: Seek opportunities within your current portfolio and with your prospects to market the program
  • Start the application process now: Identify who might benefit from the new provisions and get those applications started  
  • Take full advantage of the offerings: With multiple benefits to your clients, the SBA 504 is one of the best lending vehicles on the market at this time

We highly recommend you stay in close contact with one of our SBA 504 Loan Experts for the latest details.

 

SUMMARY FOR SBA 504

Many of the relief provisions elevate the SBA 504 program to be an even more attractive loan product in the current environment.  The summary below provides you a roadmap.  

 

1. TEMPORARY FEE ELIMINATION FOR THE 504 LOAN PROGRAM

  • From enactment of law and ending on September 30, 2021
  • Elimination of 0.5% Third Party Lender fee (also known as SBA participation fee)
  • Elimination of 1.5% CDC Fee in debenture pricing offset with appropriation to pay the CDC

 

2. REFINANCING SENIOR PROJECT DEBT  (Strong client retention tool)

  • Advantage for existing 504 lenders to help clients in portfolio looking to release working capital and restructure the 1st
  • During the 1-year period following enactment of the law, a CDC can process a cash-out subordination tore-leverage the TPL loan to a total 90% loan to value (LTV) when combined with the outstanding balance on the existing 504 loan

 

3. EXTENSION OF CARES ACT SECTION 1112 PAYMENT SUBSIDIES 

  • The SBA loan payment subsidy will be implemented. Please click the link above to download the Cheat Sheet pdf and see Page 2 for details on eligibility and the timing of the offerings.

 

4. EXPRESS LOAN AUTHORITY FOR ACCREDITED LENDERS – 504 EXPRESS LOAN PROGRAM

  • Expires on September 30, 2023
  • Only qualified ALP-CDCs will be granted authority to approve, authorize, close, and service 504 loans of $500,000 or less – subject to SBA’s review and acceptance of eligibility only (SBA shall not review CDC decisions involving creditworthiness, loan closing, or compliance with legal requirements imposed by law or regulation).  Choose your CDC partner wisely.

 

5. 504 DEBT REFINANCE 

REFINANCING NOT INVOLVING EXPANSIONS

  • Elimination of prohibition on refinancing any government-guaranteed debt
  • Qualified Debt must be at least 6 months old to be eligible for refinance – down from 2 years old
  • Elimination of requirement that loan must have been current for not less than 1 year prior to application date
  • More creative use of program goals has been reinstated for refi projects.  In regards to jobs, all existing jobs may be counted as jobs retained (full time and full-time equivalent jobs allowed)

 

6. DEBT REFINANCE WITH EXPANSION 

    • Increase in cap on amount of existing debt eligible for refi from 50% of expansion costs to 100% of expansion costs increasing use of 504 loan pricing up to 25% of the project’s value

Have questions?

Contact one of our SBA 504 loan experts who can answer questions and keep you up to date.


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