New Regulations for SBA 504 Lending Take Effect April 21

California Certified Development Company explains how changes make qualifying for SBA 504 loans easier

This week the U.S. Small Business Administration made effective two major changes for qualification of SBA 504 loans. The changes will make it easier for businesses to qualify for SBA loans and encourage business growth and job creation.

Effective April 21, the SBA has eliminated several requirements for its 504 business loan program. The changes include:

- Elimination of the personal resource test, which benefits borrowers by adding flexibility in the management of their allocation of personal resources to the small business;

- Elimination of the nine-month rule for 504-eligible project expenses, which allows businesses a longer timeframe in which to organize and initiate their small business project.

"These changes will help small and mid-sized businesses gain easier access to affordable commercial real estate and equipment financing through the SBA 504 loan program," said Barbara Morrison, CEO of TMC Financing. "The elimination of the personal resource test means that business owners no longer need to pass a personal resource test that may have restricted higher net worth borrowers in the past. The elimination of the nine-month rule means borrowers can apply costs of building improvements more than nine months from the time of the loan towards their down payment. Overall, these changes mean more business owners are now eligible for SBA financing."

For full text of the SBA's recently published Final Rule on the Federal Register regarding the changes, visit:

About SBA 504 Loans
The U. S. Small Business Administration (SBA) 504 Program offers businesses below-market, fixed rate financing for the acquisition, renovation or construction of commercial real estate. SBA 504 loans provide long-term stability for businesses with the ability to retain working capital, which can be used to further grow the business and create new jobs. The April SBA 504 interest rate is 5.18% fully fixed for 20 years. The typical loan structure for an SBA 504 loan comes from a first mortgage with a conventional lender and a second mortgage from a certified development company (CDC).

About TMC Financing
TMC Financing provides Small Business Administration (SBA) 504 real estate financing and is the leading Certified Development Company (CDC) in Northern California and Southern Nevada. During the past 30 years, TMC has provided over $7.5 billion in SBA 504 financing for more than 4,500 businesses. This financing has resulted in the creation of over 33,000 jobs. TMC has been ranked in the top five Certified Development Companies nationwide for over a decade. TMC's experienced team works directly with borrowers, lenders and real estate brokers to tailor financing packages that meet SBA program guidelines and the borrower's credit capacity. For more information, visit