In response to the COVID-19 pandemic, the federal government doubled down on SBA lending as a key economic recovery tool and enacted several enhancements to the SBA 504 program. In addition to payment relief and waived  fees, which have since expired, Congress made changes to the 504 REFI and created the 504 ALP Express Loan (ALP Express) program. Below are are details provided by the Small Business Administration (SBA) on these impactful lending opportunities:

SBA 504 ALP Express Loan Program (UPDATED JULY 29, 2022)

In section 328 of Public Law 116-260, also known as the Economic Aid Act, Congress granted the SBA the authority to establish a 504 ALP Express Loan Program. Certified Development Companies (CDC) participating in the program may expedite the approval, authorization, and closing of certain loans less than $500,000. As the popularity of the 504 program continues to grow, the ALP Express will be a great option for smaller projects to access capital faster. One of the main goals of the ALP Express is to support a focus on smaller commercial real estate loans, which ultimately helps the industry serve even more small businesses, while also modernizing the program.

For example, it can cover total project size up to $1,210,000 for existing businesses. As the popularity of the program continues to grow, the 504 Express will be a great option for small projects to access capital faster.

Eligibility is limited to CDCs, like SomerCor, that have been awarded Accredited Lender Status by the SBA. The Express Program will expire on September 30, 2023, but can be made permanent. You can read the published Interim Final Rule 022-13359, outlining the ALP Express, and the accompanying guidance for participating CDC’s to learn more

SBA 504 Refinance 

The 504 refinance option allows small businesses to restructure existing debt on their commercial real estate. Borrowers can leverage built-up equity and take money out for eligible operating expenses – the cash out piece ranges up to 20% of the appraised value of the commercial property.

On July 29, 2021 the Small Business Administration published Interim Final Rule 021-15975, outlining enhancements to the SBA 504 REFI program. Highlights include:

  • CDCs can refinance certain existing 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 
  • Reinstatement of Alternate Job Retention Goal – all existing jobs may be counted as jobs retained (full time and full time equivalent jobs allowed)

For a deeper dive, download SomerCor’s SBA 504 REFI Enhancements webinar here.

SBA Procedural Update: SBA 504 Appraisal Rule (UPDATED JULY 29, 2022)

On July 29, 2022 the Small Business Administration released SBA Procedural Notice 5000-835230, revising procedures relating to commercial real estate appraisals that CDCs must submit to the Sacramento Loan Processing Center (SPLC) for approval. 

Under current SBA procedures, if the appraisal that CDCs must submit for approval to the SLPC is less than 95% of the estimated value of the commercial real estate, the debenture must be reduced or the CDC must secure additional collateral or additional investment from the Borrower and/or guarantors. SBA revised SOP 50 10 6, to change the requirement from 95% to 90% of the estimated value of the commercial real estate.

Sign up for the SomerCor e-newsletter to receive the latest updates on these program enhancements. For additional information, connect with a member of SomerCor’s loan origination team. 

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