Under a new rule effective April 1, 2024, any bank loan made with the SBA 504 loan program will automatically qualify as economic development and provide Community Reinvestment Act (CRA) credit for lenders. This includes both bank loans made for the interim financing AND the third party permanent loan.
The Federal Reserve, FDIC and OCC recently issued the final rule that amends those agencies’ CRA regulations. According to the National Association of Development Companies (NADCO), “Bank loans to small businesses made under the SBA 504 loan program (both the interim financing and the permanent third party loan) must meet a size test and a purpose test to qualify as economic development under the Community Development Test.”
“SBA 504 loan approvals, by nature, meet both the Community Development Size & Purpose Test based on the eligibility determination performed by the Certified Development Company (CDC) during the 504 application process,” said Seedcopa Managing Director Sherwood Robbins.
Questions? Contact Seedcopa for more information.