Two major questions have popped up for borrowers and lenders since the SBA’s announcement that the regular 504 loan program had reached its congressionally authorized cap of $7.5 billion.
1. What happens to the fee waivers that so many borrowers have valued during COVID?
All currently submitted loan packages will reflect fee waivers, and those fee waivers are available to all approved loans with a loan number and authorization issued through 9/30/2021 subject to availability of funds. If a 504 loan is approved with a loan number and authorization on or after 10/1/2021, the loan will not receive fee waivers.
2. What happens to covered payments?
Debt relief payments are available to eligible loans approved with a loan number and authorization issued through 9/30/2021 subject to availability of funds. If a 504 loan is approved with a loan number and authorization on or after 10/1/2021, the loan will not receive debt relief payments.
Reminder: The lending cap is in place until Congress passes a new funding bill or the start of the new fiscal year on 10/1/2021. If the fiscal year budget is not passed prior to its start on 10/1/2021, an extension of last year’s funding budget via a continuing resolution is expected to be issued, but those funds will be in monthly increments that may not meet demand. Seedcopa’s Sherwood Robbins is Region 3 Director of the National Association of Development Companies (NADCO), which continues to advocate for any legislative fix that keeps the program operating normally. In the meantime, Seedcopa is authorized to continue submitting loan packages with no interruption. 504 debt refinancing without expansion can continue as usual.