Many of the relief provisions elevate the SBA 504 program to be an even more attractive financing option in the current environment.  The summary below provides you with a roadmap of what is included in the law. 

December 2020 COVID Relief Bill

Section-by-section Summary

Temporary elimination of certain Fees for the SBA 504 Loan program*

    • From enactment of law and ending on September 30, 2021 
    • Elimination of 0.5% SBA Participation Fee 
    • Elimination of 1.5% CDC Fee in debenture pricing offset with appropriation to pay the CDC 
    • SBA Information Notice 5000-20085 for full guidance

Extension of Cares Act Section 1112 Payment Subsidies*

    • In March of 2020, the CARES Act charged the Small Business Administration with making debt relief payments (principal, interest and fees) to help certain SBA borrowers. The federal government recently approved an additional $3.5 billion to continue and expand this payment assistance. 
    • On February 17, 2021 the Small Business Administration announced adjustments to CARES 1112 payments for 504, 7(a) and Microloans: SBA Procedural Notice 5000-20095 for full guidance
    • New loans APPROVED by September 30, 2021 (or until the appropriated funds run out), are eligible for three months of payment assistance:  
      • Payments are capped at $9,000
      • Covers principal, interest, and fees
    • Review a breakdown of available relief available here
    • SBA Procedural Notice 5000-20087 for guidance on tax treatment of 1112 Payments

On July 29, 2021 the Small Business Administration published Interim Final Rule 021-15975, outlining enhancements to the SBA 504 REFI program. These rules became effective immediately. 

504 Debt Refinancing with Expansion

  • The amount of debt eligible for refinance is increased to 100% of expansion costs (increased from 50%)

504 Debt Refinancing without Expansion

  • Qualified Debt must be at least 6 months old before the SBA application date to be eligible for refinance (reduced from 2 years)
  • Allows the refinance of certain existing government guaranteed debt
    • The refinancing of any federally-guaranteed debt must provide a “substantial benefit” to the borrower – minimum 10% savings on the new installment amount attributable to the debt being refinanced
    • Existing SBA 504 Loan – Third Party Loan and the 504 loan must be refinanced, or the Third Party Loan must be paid in full
    • Existing SBA 7(a) Loan – refi eligibility requires a certified development company to verify that the original 7(a) lender is either unwilling or unable (due to secondary market investor input) to modify the original loan terms

*Subject to the availability of funds.

Contact our team! 

SomerCor will provide the latest updates on SBA 504 program changes. In the meantime, please connect with a member of our loan origination team to learn more about borrower and lender benefits of the SBA 504 loan and refi programs.

Margaret Griffin
EVP, Chief Lending Officer
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Brian Comiskey
EVP, Chief Credit Officer
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Elisabeth Williams
VP, Loan Officer
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Eric Bacon
VP, Loan Officer
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