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SBA Hot Topic Tuesday — How to 504 Loan Job Creation and Retention

March 1, 2016

By Bob Coleman
Editor, SBA Hot Topic Tuesday

SBA Hot Topic Tuesday — How to 504 Loan Job Creation and Retention

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SBA’s oversight of CDCs and the 504 loan program takes another step forward with guidance how to calculate job creation and retention.

SBA Form 1253 defines “Jobs Created” as full-time equivalent permanent or contracted employment created within two years of financing.

SOP 50 10 5(H), Subpart C, Chapter 2, Para. II.H. provides that a Job Opportunity does not have to be at the project facility, but 75% of the jobs must be in the community where the project is located.

Example: A small business operates from locations in Community A and Community B. The business obtains a loan for an expansion of the facility in Community A. The loan enables the business to create 20 jobs. If at least 15 of the jobs are located in Community A, the CDC can report 20 jobs created.

SBA Form 1253 defines “Jobs Retained” as jobs that otherwise might be lost to the community if the project were not done. A CDC may not count all existing jobs as being retained if they were not at risk of being lost. Examples of a sufficient basis for reporting jobs retained are as follows:

Example 1: A small business has lost a contract, which would require it to lay off 10 employees. The company has an offer for another contract to replace the contract it lost, but the new contract would require a new piece of equipment. If the company purchases the new equipment and changes its processes, it can retain the 10 employees who would otherwise be laid off. The CDC can report 10 jobs retained.

Example 2: A small business operates from locations in Community A and Community B. The business obtains a loan for expansion of the facility in Community A. The loan enables the business to retain 10 jobs there that would otherwise be moved to the facility in Community B. The CDC can report 10 jobs retained. If, on the other hand, the business would have retained those 10 jobs in Community A whether or not the facility was expanded, those jobs cannot be reported as jobs retained.

Read SBA Information Notice 5000-1374

SBA Form 1253

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