WASHINGTON - Two pieces of bipartisan legislation introduced by U.S. Senators Amy Klobuchar (D-MN) and Todd Young (R-IN) to help more Americans launch and expand small businesses by improving the Small Business Administration’s (SBA) “504” loan program passed the Senate Committee on Small Business and Entrepreneurship.
The 504 Modernization and Small Manufacturer Enhancement Act would update the loan guarantee program and enhance small manufacturers’ ability to access affordable capital. The SBA’s 504 loan guarantee program provides small businesses long-term fixed rate financing for major fixed assets like land, equipment, and machinery. This legislation is also cosponsored by Senators Cory Booker (D-NJ), Marco Rubio (R-FL), and Maria Cantwell (D-WA).
The 504 Credit Risk Management Improvement Act would increase and streamline oversight of the loan program, allowing for greater accountability.
“The 504 loan program helps provide small businesses with the resources they need to create the jobs of tomorrow,” said Klobuchar. “By making key improvements to expand eligibility and increase access to capital, our bipartisan legislation will ensure that more small businesses, including small manufacturers, can access and benefit from this loan program.”
“Small businesses create about two-thirds of new American jobs and generate nearly half of all U.S. economic activity. Our bill will strengthen the Small Business Administration’s 504 loan program, which provides access to affordable capital and helped generate more than $157 million in expansion financing in Indiana last year,” said Young. “I am encouraged by this vote, and I urge my colleagues to pass this bipartisan legislation to help Hoosier small businesses.”
Specifically, the 504 Modernization and Small Manufacturer Enhancement Act will:
- Increase the maximum loan amount for small manufacturers to $6.5 million from $5.5 million;
- Decrease project costs for small manufacturers and adjust job creation and retention requirements;
- Require SBA District Offices to partner with SBA Resource Partners to provide entrepreneurial development assistance to loan recipients;
- Adjust building occupancy standards, collateral requirements, and debt refinance parameters; and
- Streamline the 504 loan closing process by allowing accredited Certified Development Companies to perform closing-related tasks.
The 504 Credit Risk Management Improvement Act will:
- Direct the SBA’s Office of Credit Risk Management (the Office) to supervise CDCs participating in the 504 program;
- Direct the Office to review a random selection of loan closings to ensure program integrity, consolidate findings into a report, and send the report to the relevant parties;
- Allow the Office to take informal and formal enforcement actions against CDCs if it finds they violated the 504 program requirements;
- Allow the Office to fine CDCs and implement a suspension if they don’t submit required reports 60 days after they’re due;
- Instruct the SBA to issue rules to clarify procedures for CDCs to comply with the National Environmental Policy Act; and
- Allow the Office to collect fees from CDCs starting one year after enactment.