This week, the Small Business Administration announced that small businesses will have improved access to two government-guaranteed loan programs beginning April 21, 2014.
The SBA recently published a Final Rule on the Federal Register that eliminates or revises several requirements for its two main loan programs: 7(a) and 504. The rule expands eligibility, makes it easier for small businesses to secure SBA-backed financing, and encourages job creation.
“These 504 and 7(a) program enhancements will expand program eligibility and improve access to capital for small businesses. Improvements in CDC corporate governance oversight enhance program integrity and encourage more local involvement,” said Ann Marie Mehlum, SBA Associate Administrator for the Office of Capital Access, in a statement.
The changes include, but are not limited to:
- Elimination of the personal resource test, which benefits borrowers by adding flexibility in the management of their allocation of personal resources to the small business;
- Elimination of the nine-month rule for 504 eligible project expenses, which allows businesses a longer timeframe in which to organize and initiate their small business project;
- Revised 504 loan program collateral requirements to allow Third Party Lender to take collateral in addition to Project collateral under certain conditions; and
- Enhanced CDC corporate governance requirements to ensure more board accountability and to reduce risks to the SBA portfolio.
In other news this week, the U.S. Senate confirmed Maria Contreras-Sweet as the new administrator of the Small Business Administration.
“With the bipartisan confirmation of Maria Contreras-Sweet … the American people will have a fierce champion who understands what it means to start a small business, and who has a proven track record of helping other small businesses succeed,” said President Obama in a statement. Two years ago, the President elevated the role of Small Business Administrator to a cabinet-level position.
The Small Business Majority also hailed the confirmation and said the choice of Contreras-Sweet was “great news for the small business community, and an important step toward strengthening small businesses and helping ensure their continued success.”
Contreras-Sweet is the founder of ProAmerica Bank and a former Secretary of Business for the state of California. She takes the reins of SBA from Marianne O’Brien Markowitz, who assumed the role of acting administrator on February 8, 2014.