Routinely, SBA issues updates to its SOP, the standard operating procedures for its lending programs, including the SBA 504. Some of the most notable changes are summarized below.
Appraisal Threshold Has Increased
SBA has increased the minimum threshold for their real estate appraisal requirements. For real estate projects of $500,000 or less, a full appraisal report isn’t required, unless a project involves:
- Equity in the project property, owned at least 2 years, is part of the borrower’s contribution;
- The real estate is Lender’s OREO;
- The loan finances a transaction involving parties with a close relationship (for example, transactions between existing owners or family members);
- The seller of the property is carrying back a loan that is part of the borrower’s contribution; or
- Special circumstances where SBA or Growth Corp conclude an appraisal is necessary
Consistent with the Agriculture Improvement Act of 2018, businesses that grow, produce, process, distribute or sell products made from hemp will be eligible for SBA loans. While hemp-related businesses will be eligible, marijuana-related businesses may not be…please contact a Loan Officer for more details.
The Job Opportunity requirements reflect the current policy that a 504 project must achieve at least one job opportunity created or retained per every $75,000 of project debenture ($120,000 for small manufacturers) unless a public policy goal is met. (This is up from one job per $65,000)
Loan amounts can reach $5.5 million per project if energy consumption is reduced by at least 10% or if the project generates more than 15% of the energy used by the Applicant at the project facility.
SBA now requires 100% ownership disclosure for all applicant EPC’s and OC’s, which includes providing each owner’s name, % ownership, SS# and address
Keep in mind, Growth Corp keeps track of these changes so you don’t have to.