Over the decades that the 504 Loan Program has been in place, the SBA has continually improved upon it time and time again. Since inception, the paperwork has lessened, the strict requirements have been lifted, and technology has improved and streamlined the process. In an ongoing attempt to improve the loan program, the SBA has once again proposed changes to both the 504 and 7a loan programs in an effort to better reach entrepreneurs. Fox Business reports on the proposed changes, including lifting the affiliation rule, the nine month rule, and eliminating the personal resource test. The full article is available here.
With these changes in place, the process will be further streamlined, requiring less paperwork for the borrower, and less time spent underwriting and processing the loan package for submission to the SBA for each approval. What does that mean for the program? It means a broader reach and more eligibility for entrepreneurs that were previously ineligible, or disinterested in the program because of the amount of paperwork or restrictions. The proposed changes would alleviate the work required for CDC's underwriting departments, thereby making the approval process even quicker than it already is. We are hopeful that the changes will pass and the program will continue to grow and provide more access to capital than ever before.