The National Association of Development Companies (NADCO) and the Small Business Administration (SBA) have communicated with members about the extraordinarily high volume of 504 approvals this year. The good news is that as an industry, we are doing our part to support small business recovery with what they need most: long-term, fixed-rate capital to rebuild and plan for the future.

However, the growth of the program does not come without challenges. In this case, the regular 504 program, which includes 504 debt refi with expansion, will reach its congressionally authorized cap of $7.5 billion before the cap is reset on October 1. As of August 21, the regular 504 program had approximately $7 billion in approvals, with estimates pointing to the program reaching the cap as soon as September 5th.

What does this mean to the small business applicant, the CDC, and lending partners?

• Absent congressional action to provide additional authority for the regular 504 program, the SBA will be unable to approve new loans or increase existing loan approvals once the program reaches the $7.5 billion cap. Please note that the cap is based on approvals, not on closed or disbursed loans.
• CDCs can submit regular 504 loans (including 504 debt refi with expansion). However, once approvals reach the $7.5 billion cap, these loans cannot be approved. NADCO has asked SBA to provide the industry with more information about what happens to loans in the process once we reach the cap. Stay tuned for additional details as they are made available.
• CDCs can submit 504 debt refi without expansion loans, which can be processed with authorizations issued as usual.