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. 

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. 

December 2020 COVID Relief Bill

Section-by-section Summary

  1. 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 
  1. Extension of Cares Act Section 1112 Payment Subsidies (Awaiting Specific Details) 
    • Loan payment subsidies by the SBA will be implemented again. The pending SBA guidance will provide details on who qualifies and number of months the subsidy will be applied.  
  1. Refinancing Senior Project Debt  (Strong client retention tool) 
    • During the 1-year period following enactment of the law, a CDC can process a cash-out subordination tore-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 
  1. 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) 
  1. 504 Debt Refinance with expansion  
    • Increase in amount of debt eligible for refinance from 50% of expansion costs to 100% of expansion costs  

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.

Brian Comiskey
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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Joseph Bailey
AVP, Loan Officer
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