C-Suite Wednesday — CREED Act of 2015 Will Help U.S. Small Business Owners Succeed

C-Suite Wednesday — CREED Act of 2015 Will Help U.S. Small Business Owners Succeed

October 28, 2015

AlexCohenBy Alex Cohen
Liberty SBF

Last April, two Senators Jeanne Shaheen (D-N.H.) and Johnny Isakson (R-Ga.) introduced the CREED Act of 2015 (S. 966) into the Senate, a bill that would reinstate the SBA 504 Loan Refinancing Program if passed into law. This is legislation that has broad support in the industry.

In May, Barbara A. Vohryzek, President & CEO of the National Association of Development Companies (NADCO), testified during a House hearing to urge passage of the Act. NADCO is an advocacy group focusing on economic development, job creation, and entrepreneurialism using SBA’s loan programs that provide capital for small businesses.


“I recommend that the successful debt refinancing with the 504 loan program, a program that was in place several years ago, be restarted permanently,” said Vohryzek. “This temporary refinance program for small businesses freed-up precious working capital which otherwise would have been spent on high interest rates or, even worse, on capital-depleting balloon loans.”

The Commercial Real Estate and Economic Development (CREED) Act was originally enacted as part of the Small Business Jobs Act of 2010. It expired only 15 months later but in that time it was responsible for refinancing $5 billion of debt for U.S. small business owners at no cost to taxpayers, according to figures released by NADCO.

As I wrote in an article for National Real Estate Investor in 2013: The program is based on a proven formula: Small Business + Commercial Real Estate = Job Growth. In most cases, a business must create or retain one job for every $65,000 guaranteed by the SBA; small manufacturers must create or retain one job for every $100,000 guaranteed. Borrowers must include projections for meeting these requirements – which are not part of the bank loan process – in their applications for Certified Development Company (CDC) loans.


NADCO says that thousands of small balance commercial mortgage-backed security loans will mature in the next three years, leaving many business owners in a difficult financial situation unless the CREED Act allows 504 lenders to once again refinance commercial equipment and real estate debt.

Most importantly, the SBA 504 Loan Program is a self-sustaining program; it requires no appropriation of funds for fiscal year 2016 incurring zero cost to taxpayers.

Small business owners still need help. According to SBA.gov there are about 28 million small businesses in the United State and they account for 54% of all sales. Small businesses also provide 55% of all jobs and 66% of all net new jobs since the 1970s. The small business sector occupies 30-50% of all commercial space in America, estimated at 20-34 billion square feet. The small business sector is vital to America’s economy and the health of our nation. The CREED Act of 2015 is just one more way we can help small business owners succeed.

Editor Note: On October 8th, John Duncan of Tennessee became the first House Republican to co-sponsor the bill, joining 27 Democrats.