Congress Passes Small Business Lending Bill – H.R. 5297

Small Business Lending BillThe U.S. House of Representatives passed the Small Business Lending Bill (H.R. 5297) today. President Obama is expected to quickly sign this bill into law. This bill establishes a $30 billion Small Business Lending Fund, but more importantly, it creates a number of new provisions for the SBA 504 program. These new provisions are as follows:

1. Fee Reductions – Allocates $505 Million for the continuation of SBA Fee reductions under the American Recovery and Reinvestment Act. Previously allocated funds were exhausted in June 2010. Fee reductions will be extended until December 31, 2010 or until the newly allocated funds are exhausted. This provision will be effective immediately upon the President’s signature. The SBA will be working to process the 700 loans in the 504 Recovery Act Queue by the end of the month.

2. Debt Refinancing – Established a temporary 2-year program of eligible business debt refinancing (up to 90%) through the SBA 504 loan program for creditworthy borrowers. Details on this provision have not yet been released by the SBA.

3. Maximum SBA 504 Loan Amounts – The loan maximum on the SBA portion of financing is permanently increased to $5 Million ($5.5 Million for small manufacturers and borrowers meeting certain Energy Efficiency Public Policy goals). This means that some lenders can participate in projects up to $12,500,000.

4. Maximum Size limit increase – Maximum Corporate tangible Net Worth increases to $15MM and two-year average net income after taxes increases to $5MM. This change will allow the SBA 504 loan program to become a very viable option for Middle Market companies.

We will continue to update all our graduates on any further developments concerning this bill and how it increases your SBA lending possibilities.