With the Economic Aid Act-New COVID Relief, there will be exciting changes coming to the SBA 504 Loan Program!

Information is limited at this time and will be forthcoming from SBA. Stay tuned to MBFC as your information source for additional email updates and lender training!  

All provisions of the new legislation are subject to congressional appropriation and full SBA implementation which will take some time.  This information being provided is to the best of our knowledge at this time

Temporary Fee Eliminations for the SBA 504 Loan Program as follows:

  • New loan approvals from December 27, 2020 (enactment of new law) through September 30, 2021
  • Waiver of 0.5% Third Party Lender Participation Fee – on loan in senior lien position in 504 project
  • Waiver of 1.5% CDC Processing Fee (in debenture pricing)

504 Refinance without Expansion Changes:

  • Elimination of prohibition on refinance of any government-guaranteed debt
  • Reduction from 2 years to 6 months required time that Qualified Debt must be in place for refinance eligibility
  • The eligibility requirement that the qualified debt has been current for not less than 1 year prior to application has been removed and is now a credit decision
  • Elimination of requirement that 504 Debt Refinance without Expansion be suspended if 504 Loan Program goes on subsidy

504 Refinance With Expansion

  • Increase in amount of debt eligible for refinance from 50% of expansion cost to 100% of expansion costs

Cash-Out Subordinations

  • For 1 year beginning December 27, 2020, a CDC is authorized to allow the refinancing of a senior loan in an amount that when combined with the outstanding balance of the 504 Loan is not more than 90% of total Loan to Value
  • Cash out from the refinancing can be used not only for Project Property collateral, but also for business operating expenses

504 Express Loan Program

  • Temporary Program until September 30, 2023
  • CDC must be approved under Accredited Lenders Program (ALP)
  • Delegated authority to approve, authorize, close, and service 504 loans of $500,000 or less
  • Does not include loans to borrower in industry with high default rate
    • Determined annually and published by SBA
  • Eligibility is subject to final review
  • MBFC is an ALP Lender

Debt Relief Under CARES ACT Section 1112

  • Congress appropriated $3.5 billion for carrying out section 325 of the Economic Aid Act, and those funds remain available until expended. Payment assistance is subject to adjustment based on availability of funds.
  • Click here for more information on the CARES ACT Section 1112 Relief as of January 21, 2021 NADCO Regulatory Update