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

Please note – the SBA 504 program changes outlined below are subject to review by the Small Business Administration (SBA). The SBA is expected to provide guidance on these provisions in the coming weeks. SomerCor will provide updates as information becomes available. 

Refinancing Senior Project Debt 

    • During the 1-year period following enactment of the law, a CDC can process a cash-out subordination to re-leverage the TPL loan to a total 90% loan to value (LTV) when combined with the outstanding balance on the existing 504 loan 
    • Proceeds can be used to support business operating expenses 
    • Full details provided in SBA Procedural Notice 5000-20099

504 Debt Refinance– without expansion 

    • Elimination of prohibition on refinancing any government-guaranteed debt  
    • Qualified Debt must be at least 6 months old to be eligible for refinance – down from 2 years 
    • Elimination of requirement that loan must have been current for 1 year prior to application date 
    • More creative use of program goals has been reinstated for refi projects. In regards to jobs, all existing jobs may be counted as jobs retained (full time and full-time equivalent jobs allowed) 

504 Debt Refinance with expansion  

    • Increase in amount of debt eligible for refinance from 50% of expansion costs to 100% of expansion costs  

*Subject to the availability of funds.

Have Questions?
Contact one of SomerCor’s SBA 504 loan experts who can answer questions and keep you up to date and signup for our newsletter below.

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