SBA Releases New Updates

On February 25, 2014, the SBA released information regarding important proposed changes to the 7(a) and 504 loan programs. These changes are to become effective and published in the Federal Register today, March 21, 2014. In accordance with the previous rule proposal submitted by the SBA in February of 2014, the SBA is continually seeking to strengthen business loan programs and diminish program restrictions and compliance burdens. As stated by the SBA, "This rule finalizes the proposed rule that the U.S. Small Business Administration (“SBA”) issued to improve access to its two flagship business lending programs: the 504 Loan Program and the 7(a) Loan Program." As reflected below, one of the more important and key issues for 7(a) lending is the elimination of the Personal Resources Test. With help from suggestions from commenters, the SBA "determined that elimination of the personal resources test would enable more robust Borrowers to participate in SBA’s loan programs, thus mitigating risk to SBA’s loan portfolio while facilitating job growth." In addition to changes regarding the Personal Resources Test, please see below for some of the other key areas of change proposed by the SBA.

7(a) and 504 Proposed Provisions: 
1. Personal Resources Test Eliminated - Provision removed from regulations 
2. Affiliation Standards - Nothing has been finalized at this time 
3. 7(a) and 504 Affiliate Relations 
4. SBA Form Modifications 
5. Multiple CDC Changes

To discover more changes regarding these programs, please click here to see a full report on the finalized SBA rule. Should you wish to learn more about the various SBA programs contact CBAO Jim Sarosy at 614.846.2170 or jjsarosy@CBAO.com