2013 March 11

Changes Proposed by the U.S. Small Business Administration Will Make Borrowing & Lending Easier

After extensive consultations with lenders and borrowers to identify the greatest challenges they faced when lending and borrowing, the SBA found ways to reduce barriers in order to make SBA business loans easier. Borrowers and lenders of SBA loans will have greater access to capital and less paperwork as a result of a proposed regulation to streamline the SBA application process. The goals of the proposed changes include:

• Greater Access to Capital
• Less SBA Loan Paperwork
• Make Lending and Financing SBA Loans Easier for Banks and CDCs
• Make the SBA Loan Process Easier for Borrowers
• Strengthen Oversight and the Integrity of SBA Loan Programs

SBA expects changes to take place in the 3rd Quarter of 2013

2013 March 14

Sweeping Changes Coming to SBA 504 and 7(a) Loan Programs

Proposed changes will eliminate certain SBA criteria to make it EASIER to obtain SBA loans. To follow are a few of the significant changes that are proposed for the SBA 504 and 7(a) Loan Programs:

• Eliminate Personal Resource Test: which requires the Certified Development Company (CDC) to certify that the borrower does not have excess liquid assets that could be injected into the project. Recent history has shown that even borrowers with significant personal resources are having difficulty obtaining long-term fixed asset financing from private sources at reasonable rates and terms. Capital access is part of the mission of SBA. The Personal Resources hurdle is an impediment to obtaining capital by our nations small businesses. If adopted, this rule should improve the overall SBA lending environment.
• Eliminate Nine-Month Rule: Instead, costs directly attributable to the Project including expenditures incurred by the Borrower (with its own funds or from a loan) or for any other expense prior to applying for the 504 Loan will be eligible.
• Eliminate Third-Party Preference: Instead, if the Third Party Lender requires a lien on additional collateral (i.e., collateral other than the Project Property "Common Collateral" also securing the 504 Loan), the Third Party Lender must apply the proceeds from the sale of the additional collateral to the outstanding balance of the Third Party Loan in a liquidation situation.

Check back often for information about new developments in business financing and business loans

Have questions about business loans for your project or need more information about SBA financing? Call our CMDC staff today 763.784.3337