SBA 504 Loans and the 2008 Stimulus Package

According to Ron Reuss, President of GulfCoast Business Finance (www.gulfcoastbiz.com), the new 2008 Stimulus Package includes the following in respect to the SBA 504 loan program:

Appropriation of $100 million for loan subsidy & loan modification costs for 504 loans to cover
elimination of SBA 504 fees through September 2010, provided appropriated funds continue to
offset such fees;

Temporary elimination of bank participation fee (currently .5%) and CDC processing fee (currently 1.5%);

The SBA 504 requirement of projected employment impact will change from "one job projected
to be created per $50,000" to "one job projected to be created for every $65,000 in SBA funds"

If the project meets with SBA's public policy or community development goals, this job
creation requirement does not apply.

A SBA Secondary Market guarantee authority of up to $3.0 billion has been established to
facilitate the sale of 504 first mortgage pools. (These may be existing pools of loans, or new loans
that may be pooled after date of enactment.)

Refinancing existing debt (in an amount not to exceed 50% of the projected cost of the project financed), if;
the new loan involves business expansion
it is collateralized by fixed assets
the existing debt was incurred for benefit of small business
proceeds are used to acquire land, to construct or expand building or to purchase equipment
borrower is current on all payments of existing debt for one year
new financing will provide better terms or interest rate
new financing will be used only for refinancing existing debt, or for costs related to project
being financed

For the SBA 7(a) loan program, loan fees were eliminated and the SBA will now guarantee the
7(a) lender up to 90% of the outstanding loan.

No provisions were offered in the bill that increase the amount of SBA 504 loan nor the
amount of the 7(a) loan guarantee of $1.5 million.