Summary#
This bill changes parts of the Small Business Investment Act to update the SBA 504 loan program and help small manufacturers get capital. It adds workforce development as a policy goal and creates new rules for loan closings, lawyer oversight, outreach, leasing, and an exemption from the "credit elsewhere" rule.
Key changes in the bill text:
- Policy goals: Adds workforce development as a goal. A project can meet this by showing the business has an in-house training program of at least 12 weeks or a contract with an outside trainer who provides at least 12 weeks of relevant training for job applicants. It also adds aid for areas recovering from declared disasters (with a five-year window that the Administrator can extend by one-year increments) and support for expanding businesses with 10 or fewer employees.
- Loan closing changes: Allows an accredited certified development company (CDC) to make certain small changes at closing, such as reallocating up to 10% of project costs, fixing typos in names or addresses, adding an eligible passive company and a related operating company to receive loan proceeds, changing a guarantor to a co-borrower (or vice versa), and reducing project costs or debt that fell due to scheduled payments. The bill defines "accredited lender certified company."
- Closing and oversight: Creates a process for "designated attorneys" at Priority CDCs to close loans if they meet requirements. After 180 days, SBA district counsels keep most duties but will not review closing packages for loans closed by a designated attorney. The Office of Credit Risk Management will handle file reviews for those loans. A designated attorney must be licensed in the state, have malpractice insurance, and attend SBA-approved training.
- SBA marketing and outreach: Requires the SBA to make a marketing and outreach plan for loans under this title and allows partnerships with resource partners. The SBA must start implementing the plan within one year of enactment.
- Leasing rules: For new facility projects, a borrower may permanently lease up to 20% of the project if the borrower occupies at least 60% (50% for small manufacturers), plans to occupy more within 3 years, and plans to occupy 80% within 10 years. For existing buildings, a borrower may lease up to 50% if it occupies 50%. Under conditions, it may lease up to 66% if it previously occupied the building for 12 months and agrees to certain post-closing use terms. The development company must notify the SBA at closing and perform periodic examinations and anti-investor certifications. Residential leases are limited to 1 year; commercial leases to 5 years.
- Reporting: The SBA must report to Congress within 5 years on how these leasing amendments affected small businesses' access to capital.
- Credit elsewhere exemption: Amends the Small Business Act so the "credit elsewhere" rule does not apply to 504 loans, certain Small Business Investment Act financings, or loans made by the Administrator to certified development companies.
What it means for you#
- Small manufacturers and small businesses: The bill aims to make 504 loans easier to use. It gives more leasing flexibility for new and existing buildings, especially for small manufacturers. It also adds workforce training as a policy goal for projects.
- Certified development companies and lenders: Accredited CDCs and Priority CDCs may be able to close loans faster and make limited changes at closing. Designated attorneys at approved CDCs can sign closing documents if they meet the rules.
- Borrowers and tenants: Lease limits and terms for residential and commercial space are specified. Some projects may be allowed higher lease percentages under conditions.
- SBA operations: The SBA must create a marketing plan within a year and the Office of Credit Risk Management will take on file review duties for loans closed by designated attorneys.
Expenses#
No publicly available information on the bill's costs or budgetary effects is included in the provided text. The bill requires a marketing plan to start within one year and a report to Congress within five years, but it does not state funding levels.
Proponents' View#
The bill's stated purpose in the text is to "improve the loan guaranty program" and "enhance the ability of small manufacturers to access affordable capital." It adds workforce development goals, seeks faster and more flexible loan closings for accredited CDCs, expands leasing options for projects, requires SBA outreach, and creates a reporting requirement to Congress.
Opponents' View#
No publicly available information on opponents' views is included in the provided bill text or metadata.