By Bob Coleman
Editor, Hot Topic Tuesday
That means loan losses in the SBA 504 loan program will be entirely funded by borrower and CDC fees — with zero cost to taxpayers.
SBA 504 needed a taxpayer subsidy for the past five years, due to once in a generation loan losses incurred by the Great Recession.
But remember, the program was instrumental in helping small business, and Main Street recover by creating 200,000 jobs between 2008 and 2010 alone.
The SBA 504 loan program clearly exceeds its mission of creating and retaining jobs at a minimal cost to the taxpayer. Add it all the secondary economic benefits of job creation, the program is an important part of capital access for Main Street.
‘The SBA 504 loan program has been helping entrepreneurs fulfill the American dream for over 30 years,” says B Vohryzek, CEO and President of NADCO. “It was an integral economic development tool in reinvigorating the economy during the Great Recession, when banks were incapable of lending to small businesses. As a program that that can fill the credit market gap during an economic downturn, the SBA 504 is vital to small businesses that need capital during difficult economic times.’
Continues B, ‘The program provides funding to credit-worthy small businesses that cannot utilize conventional loans due to the required high down payment. 504 loans, which are funded through SBA guaranteed debentures, provide the incentives needed for lenders to be our partners in the financing thereby allowing small businesses to expand.
‘The loan is primarily for equipment, land, and commercial real estate, providing collateral to protect a lending partner as well as U.S. taxpayers. NADCO looks forward to this return to normal program funding and continuing the work of economic development and job creation across America.’