SBA officials announced this week at NADCO’s Spring Summit that the Office of Management and Budget (OMB) has cleared the way for the issuance of 25-year debentures in the SBA 504 program. This structure has long been sought by the industry to provide its small business borrowers a longer-term option in addition to the existing 10- and 20-year loan products. Improved cash flow is of vital interest to all businesses, especially those served by the 504 program, and the longer maturity is a vehicle that can serve that purpose. The announcement was very well received by Spring Summit attendees.
The new 25-year debenture is a FY18 initiative, and the details are being finalized by SBA and the other parties involved in the debenture funding process. While specifics of the timeline for the launch of the 25-year debenture were not discussed, due to the number of parties involved in this new issuance, it is likely the launch will not occur until after the first quarter of FY18.
**All information in this article has been provided by NADCO (National Association of Development Companies).**