Significant Changes Coming to SBA 7(a) and 504 Loans, CDC Operations
February 22, 2013
by Bob Coleman
On Monday, SBA will propose historical changes to its lending programs. The 57-page Federal Register notice is seeking comment on a number of proposals to streamline the programs and eliminate unneeded paperwork and rules.
We will cover the proposals in depth in the coming weeks, but here is a peek of the agency’s thinking:
Simplify the “affiliation” rule. This would eliminate the need to collect financial statements and tax returns in a number of instances.
Elimination of the personal cash resource test. The rationale is even those with cash reserves are finding it difficult to obtain conventional small business loans.
Elimination of the “9-month Rule” on expenses for 504 loans and allow financing of all expenses, regardless of when they occurred.
Finally, in response to the fallout from the agency’s seizure of Frank Dinsmore’s EDF Resource Capital certified development company, SBA is proposing a slew of organizational changes to how CDCs operate. Basically the agency is demanding CDCs operate with oversight from an independent board of directors.