December 22, 2016

By Bob Coleman
Editor, Coleman Report

washingtoncapitolSBA Hot Topic Tuesday — SBA 504 Refinance is Now the Law of the Land!

Well, technically Congress has granted the SBA Administrator the authority to write the rules (which some estimate will take up to six months.)

This is what we know today.

SBA 504 Refi will be allowed in years the 504 loan program operates at a zero subsidy — that is it is revenue neutral to the government.
No more than 50% of the SBA 504 program may be refinanced loans.
SBA’s 504 job creation mandate has been amended to “job creation and retention.”

For those of us who like to dwell in the weeds, here is the language from the bill:

SEC. 521. (a) Subparagraph (C) of section 502(7) of 4 the Small Business Investment Act of 1958 (15 U.S.C. 5 696(7)), as in effect on September 25, 2012, shall be in effect in any fiscal year during which the cost to the Federal Government of making guarantees under such sub-paragraph (C) and section 503 of the Small Business Investment Act of 1958 (15 U.S.C. 697) is zero, except that —

(1) subclause (I)(bb) and subclause (II) of clause (iv) of such subparagraph (C) shall not be in effect;

(2) unless, upon application by a development company and after determining that the refinance loan is needed for good cause, the Administrator of the Small Business Administration waives this paragraph, a development company shall limit its financings under section 502 of the Small Business Investment Act of 1958 (15 U.S.C. 696) so that, during any fiscal year, new financings under such subparagraph (C) shall not exceed 50 percent of the dollars loaned under title V of the Small Business Investment Act of 1958 (15 U.S.C. 695 et seq.) during the previous fiscal year; and

(3) clause (iv)(I)(aa) of such subparagraph (C) shall be applied by substituting ‘‘job creation and retention’’ for ‘‘job creation’’.

Congratulations to all of you who garnered bipartisan support to make this happen.

Here is a blast from the past on those efforts.

Senator Isakson to Sponsor 504 1st Mortgage Lien and Refinance Program
May 4, 2012

senatorisaksonSenator Johnny Isakson said he would add his name to be a sponsor of Senate Bill 2364. This bill would extend both the 504 1st Mortgage “guarantee” Lien Program (FMLP) and the 504 Refinance Program. This bill, originally introduce by Senator Snowe of Maine, has no cost to the tax payers, as the Congressional Budget Office gave it a zero subsidy effect. In reality, FMLP should generate revenues for the SBA, as it carries a very high annual renewal fee on 75 bps.

Senator Isakson stated that he realized that the long term credit markets are still highly dysfunctional, as the regulators are not letting small community banks book long term 25 year mortgages and the big banks do want these loans. Absent conduits or securitized mortgage programs, there is currently no avenue for most real estate borrowers to obtain funding for their projects. Without the funding, these borrowers cannot grow and create the jobs that are needed in today’s economy. In summary, Senator Isakson stated that this bill is a “Jobs Bill” and believed it should receive bipartisan support in the U.S. Senate. A potential bottle neck could be that Senate Majority Leader Harry Reid has the sole authority to call new bills out on the Senate floor.

All of the thirteen attendees and the 20+ attendees calling in remotely, thanked Senator Isakson for his continued strong support of small business.


Michael Thomas – Chief Executive Officer, Thomas USAF Group
Anita Thomas – Board Member, SCAD
Chris Brogdon – Chief Acquisition Officer, AdCare Health Systems
Noble Jones – President, Bank of Atlanta
Thomas Dorman – Senior VP of Small Business Lending, Bank of Atlanta
Gerry Benjamin – Partner, Atlanta Equity Investors
Nack Pack – Chairman, Metro City Bank
Richard McCrea – Fidelity Bank
Tom Wallace – President, Independent Development Services Corporation
Anurag Varma — Counsel, Patton Boggs
David Sinyard – Managing Director, Corporate Finance Associates
Thelma Wilke – Partner, Savannah Suites
Aaron Lawson – Partner, Savannah Suites

Via Conference Call

Vasu Srinivasan – Manager, McDonald USAF Group
Thomas Kimsey – Executive VP, Thomas Financial Group
Bob Judge – Managing Director, Government Loan Solutions
Rob Herrick – Partner, Government Loan Solutions
Jordan Blanchard – Executive VP, CDC Small Business
Sanat Patel – The Bank of Las Vegas
Andrew Patel – The Bank of Las Vegas
Mike Schwartz – President, DelVal Business Finance
Gary Griffin – President, Capital Growth Solutions
Howard Anderson – Vice President, Zions Bank
Matthew Hunt – Zions Bank
Kurt Chilcott – CDC Small Business Finance
Ken Rosenthal – CDC Small Business Finance
Marty Ferguson – Evolve Bank
Bob Dreadavawy – Voyager Bank
Danny Lee – Midtown Bank
Steve Stadlin – NADCO
Ira Lutsky – New Jersey, CDC Small Business Finance
Bruce Lammers – Chief Executive Officer, Ridgestone Bank
Russ Smith — Pacific Enterprise Bank
Brian Halle – Pacific Enterprise Bank
Chris Crawford — Chaiman, NADCO
Peter Morgan — Zions Bank