SBA Hot Topic Tuesday — CDC Leaders to Congress: Increase Loan Limits and Modernize the SBA 504 Program

September 23, 2025

by Bob Coleman
Founder & Publisher

SBA Hot Topic Tuesday — CDC Leaders to Congress: Increase Loan Limits and Modernize the SBA 504 Program

Last week, the Senate Committee on Small Business & Entrepreneurship convened a hearing on the SBA’s 504 Loan Program — one of the agency’s most powerful tools for fostering small business growth, job creation, and community investment.

A common theme echoed throughout the testimonies: the 504 program is working, but its outdated loan caps and rigid requirements are holding small businesses back. Witnesses urged Congress to increase loan limits, reduce burdensome equity requirements, and eliminate arbitrary restrictions that block creditworthy borrowers from accessing capital.

Testimony of Hilda Kennedy (AmPac Tri-State CDC, CA)

Hilda Kennedy, Founder and President of AmPac Tri-State CDC, emphasized how the 504 program has empowered small businesses in California and beyond, but warned that outdated limits are restricting growth. She offered five recommendations to Congress:

  1. Raise Loan Limits for Manufacturers and Standard 504 Loans – Increase the cap for manufacturers from $5.5M to $10M, and raise the regular 504 limit from $5M to $7.5M.
  2. Eliminate the $16.5M Cap on Energy 504 Loans – Remove the ceiling on energy-related projects to better support clean energy and manufacturing growth.
  3. Pilot a 5% Down Payment Program – Create a pilot program allowing first-generation entrepreneurs and first-time commercial real estate buyers to qualify with a 5% equity injection.
  4. Remove Extra Equity for Special Purpose Properties – Eliminate the additional 5% down payment required for certain property types, such as urgent care and dental practices.
  5. Restore Flexible Citizenship Rules – Return to the prior SBA policy allowing majority U.S.-owned businesses with minority non-citizen partners to access financing.

Testimony of Jean Wojtowicz (Indiana Statewide CDC)

Jean Wojtowicz, Executive Director of Indiana Statewide CDC, highlighted how the 504 program’s financing structure fuels job creation but stressed that rising costs have outpaced statutory loan caps. Her five recommendations to Congress included:

  1. Increase Manufacturing Loan Size to $10M – Support MAMFA to allow project costs up to $25M.
  2. Lower Borrower Equity Injection for Manufacturers – Reduce the equity requirement from 10% to 5% to preserve critical working capital.
  3. Raise Regular 504 Loan Limit to $7.5M and Index for Inflation – Update the standard cap (unchanged since 2010) and tie future increases to inflation.
  4. Eliminate Special Purpose Property Penalty – Remove the 5% equity penalty on “special purpose” properties, while keeping higher requirements only for startups under two years old.
  5. Decouple 504 from the 7(a) Program – Remove the “credit elsewhere” test and personal resource review, which can penalize 504 borrowers and reduce liquidity.

Testimony of David Raccio (CDC New England)

David Raccio, Senior Vice President and Director of SBA Lending at CDC New England, underscored how the 504 program supports local economies but argued that modernization is urgently needed to keep pace with demand. He presented five priority reforms:

  1. Lift $16.5M Energy Loan Cap & Raise Loan Limits – Eliminate the ceiling on renewable energy projects and increase caps to $7.5M for standard 504 loans and $10M for manufacturing and energy.
  2. Reduce Equity Requirement for Manufacturers – Lower the borrower contribution from 10% to 5% to ease expansion for capital-intensive firms.
  3. Restore Citizenship Eligibility Rules – Revert to the prior SBA approach that allowed majority U.S.-owned firms with minority non-citizen ownership to qualify.
  4. Remove Extra Equity for Special Purpose Properties – Strike the outdated 5% down payment requirement for industries like farms, urgent care, and auto repair.
  5. Modernize Occupancy, Refinance, and Closing Processes – Lower occupancy thresholds to 50%, simplify refinance eligibility, and delegate minor closing corrections to CDCs to streamline approvals.

Takeaway

Increasing loan limits was the top priority across all testimonies, alongside lowering equity requirements, eliminating outdated restrictions, and restoring practical eligibility rules.