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Sweeping Changes Coming to SBA 504 and 7(a) Loan Programs

March 17, 2013

Proposed changes will eliminate certain SBA criteria to make it EASIER to obtain SBA loans. To follow are a few of the significant changes that are proposed for the SBA 504 and 7(a) Loan Programs:


  • Eliminate Personal Resource Test: which requires the Certified Development Company (CDC) to certify that the borrower does not have excess liquid assets that could be injected into the project. Recent history has shown that even borrowers with significant personal resources are having difficulty obtaining long-term fixed asset financing from private sources at reasonable rates and terms. Capital access is part of the mission of SBA. The Personal Resources hurdle is an impediment to obtaining capital by our nations small businesses. If adopted, this rule should improve the overall SBA lending environment.
  • Eliminate Nine-Month Rule: Instead, costs directly attributable to the Project including expenditures incurred by the Borrower (with its own funds or from a loan) or for any other expense prior to applying for the 504 Loan will be eligible.
  • Eliminate Third-Party Preference: Instead, if the Third Party Lender requires a lien on additional collateral (i.e., collateral other than the Project Property "Common Collateral" also securing the 504 Loan), the Third Party Lender must apply the proceeds from the sale of the additional collateral to the outstanding balance of the Third Party Loan in a liquidation situation.

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Have questions about business loans for your project or need more information about SBA financing? Call our CMDC staff today 763.784.3337

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