The Community Reinvestment Act (CRA) is a landmark law enacted in 1977 to address systemic inequities in access to credit. The CRA encourages federally insured banks to help meet the credit needs of the communities in which they do business, especially low- and moderate-income (LMI) communities, consistent with safe and sound operations. (Source – FED, FDIC, OCC)

Effective April 1, 2024, as a result of an update to the CRA, any bank loan made in conjunction with the SBA 504 loan program will automatically qualify as economic development and meet the Community Development Financing Test for CRA credit. This includes bank loans made for the interim financing and the third party loan. The text of the Final Rule can be found here.

The SBA 504 is not a loan of last resort. It is the Small Business Administration’s premier economic development program with a well-established framework and an over 30-year track record of success in the market. This financing tool can be a great fit for businesses in the start-up phase to established mid-sized companies.

The SBA 504 is a win-win for lenders and borrowers. In addition to all 504 loans being eligible for CRA credit, the program can help lower lending risk, increase liquidity, strengthen existing loan portfolios, and expand potential lending opportunities for banks.

Sign up for the SomerCor e-newsletter to receive the latest updates on SBA 504 program enhancements. For additional information, connect with a member of SomerCor’s loan origination team. 

Margaret Griffin

EVP, Chief Lending Officer

Eric Bacon

SVP, Loan Officer

Darin Gehrke

SVP, Loan Officer

Elisabeth Williams

SVP, Loan Officer