WASHINGTON – U.S. Senators Amy Klobuchar (D-MN) and Todd Young (R-IN) introduced two bills to improve the Small Business Administration’s (SBA) 504 loan program.
The 504 Modernization and Small Manufacturer Enhancement Act will update the loan guarantee program and enhance small manufacturers’ ability to access affordable capital. The SBA’s 504 loan guaranty program provides small businesses long-term fixed rate financing for major fixed assets like land, equipment, and machinery. This bill is cosponsored by Senators Cory Booker (D-NJ) and Marco Rubio (R-FL). Companion legislation in the House is led by Representative Angie Craig (D-MN).
The 504 Credit Risk Management Improvement Act will increase and streamline oversight of the loan program, allowing small businesses to grow, modernize, and recover from the coronavirus pandemic. This bill is also cosponsored by Senator Booker. Companion legislation in the House is led by Representative Dan Bishop (R-NC).
“Small businesses are key to a strong economy, and as we round the corner of the pandemic, the SBA’s 504 Loan Program can help small businesses create the jobs of tomorrow,” said Klobuchar. “This legislation will make key improvements to the 504 loan program, increasing eligibility and giving more small businesses greater access to capital.”
“Small businesses are the backbone of our economy, creating about two-thirds of new American jobs and generating nearly half of U.S. economic activity. In Indiana, the SBA’s 504 loan program has led to more than $1.8 billion in expansion financing and has saved or created tens of thousands of Hoosier jobs,” said Young. “I am proud to support this legislation, which will help small businesses expand or begin new projects to grow the local Hoosier economy.”
“As our small businesses continue to recover from the impact of the COVID-19 public health and economic crisis, we must do everything we can to support small manufacturers and ensure that the SBA programs available to them are operating as effectively and efficiently as possible,” said Craig. “I’m proud to help lead this bipartisan legislation in the House and look forward to working closely with Senator Klobuchar to get it over the finish line for Minnesota’s small manufacturers.”
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 numerous administrative processes associated with 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 30 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.
In September, Klobuchar cosponsored the Small Business Debt Relief Extension Act, which would extend debt relief for small businesses hit particularly hard by the pandemic.
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