By Karen Axelton
Are you seeking financing for your small business? Then you may be happy to know that the SBA is proposing changes to two of its popular small business loans that would result in streamlined paperwork and easier access to capital for small businesses.
“Streamlining and simplifying has been a key focus of our agency over the last few years,” said SBA Administrator Karen Mills. “The changes are the latest steps to reduce paperwork burden, with our eye on the larger goal of expanding access to capital and giving entrepreneurs and small business owners the financial resources to grow and create jobs.”
The proposed changes affect the 7(a) and 504 loan programs, and include:
Eliminating the Personal Resource Test: Small business borrowers will no longer have to obtain a maximum level of personal finance resources in order to qualify for a 7(a) or 504 loan. This will streamline the loan process by eliminating currently complicated regulations lenders use to determine how much collateral is required.
Revising the Rule on Affiliation: This change will expand access to SBA loans to businesses that, under current rules, wouldn’t qualify as small businesses under SBA’s size standards because they are associated with other companies. It also would streamline 504 loan applications and reduce paperwork requirements for both the 504 and 7(a) loan applications.
Eliminating the Nine-Month Rule for the 504 Loan Program: This change would remove a restriction that requires a business to include in its 504 project only expenses incurred nine months prior to submitting the loan application. The new rule would let businesses include expenses incurred at any time—such as costs for projects that were put on hold for more than nine months due to a natural disaster.
The 504 and 7(a) loan programs are the SBA’s biggest lending programs. The 504 program provides long-term fixed asset financing that small businesses can use to buy or improve land, buildings or equipment. The 7(a) loan program helps eligible small businesses access credit when they have been turned down elsewhere.
For more detailed information on the new proposed rules and their benefits, visit http://www.sba.gov/content/revised-oca-regulations-504-and-7a-loan-program.
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