SBA Announces Changes to 504 Loans
Effective April 21, 2014, two new rule changes will go into place for SBA 504 borrowers that will help with qualification and eligibility. SBA will be eliminating the Personal Resources Test for all SBA 504 borrowers. In the past, certain borrowers whose liquid assets exceeded the size of their current economic development project were required to inject more equity and reduce/eliminate the SBA 504 portion of the transaction. SBA will no longer have the excess liquid resource injection requirement going forward.
Also being eliminated on April 21st is the 9 month look back period. The 9 month look back period allows project costs incurred within the 9 months prior to loan application to be eligible. With the elimination of the rule, all project costs, no matter when they were incurred, will be eligible for SBA 504 financing. The costs must be directly attributable to the project and cannot have already been financed by permanent long term debt.
SBA continues to make positive modifications to the SBA 504 loan application process that assist with eligibility and ease of application. Remember to contact EDC Finance Corporation to learn more about how an SBA 504 loan can benefit your next economic development project.
Courtesy of an Economic Development News Announcement Dated April 21, 2014. Visit the EDC’s website here: