On April 5, 2004, H.R. 4062, which provides a temporary extension of authorization for certain SBA programs, was signed into law. Some of the most important changes are summarized in this Notice. These changes are effective starting on April 5, 2004, and expire on September 30, 2004, unless extended by subsequent legislation.
As a result of this legislation, SBA will be able to provide approximately an additional $3 billion (for a total of approximately $12.5 billion) in 7 (a) loan guarantees through the end of this fiscal year.
The following is a summary of the 7(a) program changes that take effect immediately.
1. Pursuant to this Notice, the temporary $750,000 loan cap imposed by Policy Notice 5000-902 dated December 30, 2003 and which took effect on January 8, 2004, is lifted. The limit on the gross amount of a 7(a) loan once again is $2.0 million, under section 7a)(3)(A) of the Small Business Act ("Act").
2. H.R. 4062 temporarily increases the loan guaranty limit under section 7(a)(3)(A) of the Act from $1.0 million to $1.5 million. (For example, a $2.0 million loan may now have a 75% guaranty.) This increase in the loan guaranty limit applies to loans approved on or after April 5, 2004 and through and including September 30, 2004.
Lien Position/Combination Financing
1. Pursuant to this Notice, the portion of Policy Notice 0000-1709 dated January 13, 2004, which temporarily prohibited the piggyback loan structure (see SOP 50 10 4, Subpart A, Chapter 2, paragraph 4(g)(3)) from qualifying for a 7(a) loan, is rescinded.
2. H.R. 4062 also creates a temporary new term, Combination Financing, to describe a type of financing commonly known as piggyback financing. The legislation provides that Combination Financings must meet the following requirements:
If a PLP lender is making both the commercial loan and the 7(a) loan in a Combination Financing, the lender must submit the 7(a) loan to the SBA District Office, not the PLP Processing Center, for processing and approval. Other Requirements for Combination Financing In addition to the items above, SBA is establishing the following requirements for Combination Loans:
Guarantee and Annual Fees
SBA Express Program Changes
1. SBA Express lenders may now approve SBA Express loans up to $2.0 million (gross amount) using existing SBA Express procedures.
2. SBA will continue to accept applications for new participants in SBA Express and will continue to handle renewals under the current procedures.
3. The legislation does not change the current policies and procedures governing Export Express or Community Express.
The Associate Administrator for Financial Assistance is hereby delegated the authority to waive the requirements not specifically contained in the statute.
The legislation extends SBA's authority to collect certain fees with respect to 504 loans, through September 30, 2004.
We plan to issue a separate notice addressing procedural issues raised as a consequence of the legislation. SBA District Offices with questions on this notice may direct their questions to Jim Hammersley, Director, Office of Loan Programs at firstname.lastname@example.org. Lenders are directed to forward questions to the local SBA field office.
Hector V. Barreto
This is one of thousands of government programs that are available to business owners to facilitate business expansion, job creation and development of particular targeted geographical zones. It is important to first take a 30,000 foot view of the financing landscape, because there are so many programs you will need some guidance on selection of the appropriate ones to focus you resources on. C-Level Enterprises can help classify the targeted types of financing and get you to experts on particular areas that can help.
C-Level Enterprises offers a flat rate consultation session on financing to help young companies identify and improve on what they don't know yet and improve their chances of raising capital. This might very well be the best few hundred dollars you ever spend, as it can prepare you to raise millions. Most young companies jump in much too early and not only waste months of effort, but also shut down their best contacts early. This prevents them from getting to other investors that the first ones might refer them to if they felt you were ready. Don't burn these bridges - Be Prepared BEFORE your first investor pitch. Ninety-nine percent of people will not or can not provide good feedback on what you are doing wrong. You need this so you can correct it - Get this help today by emailing: bob@CLevelEnterprises.com.