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Refinancing with SBA 504 Loans – As reported in today’s New York Times: A small step that doesn’t go far enough.
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The SBA’s latest attempt at helping the small business community is to ease the restrictions on using 504 loan funds for the purposes of refinancing. This change was announced earlier this week, and is a fine idea, but it unfortunately doesn’t do enough to truly provide the aid that small businesses need right now. Go here to read my comments about this in today’s New York Times article.

The major stipulation that concerns me is that this new rule requires businesses to use the funds for expansion purposes. Don’t get me wrong — I think right now is a great time for companies to consider expanding, given all the discounted assets that are all around us. But the fact of the matter is that not too many business owners are truly in expansion mode right now. I really don’t foresee many new loans being created because of this small change the SBA has announced.

This is a shame, because the total number of 504 loans the SBA has approved this fiscal year is down 41.5% from the same period last year. Total dollar amount funded has dropped 42.5% from last year. It’s apparent that the SBA needs to do more than it did earlier this week to stimulate lending (and this minor change was announced back in February . . . not exactly quick action on stimulating the economy). We need to do something to soak up the billions of SBA dollars that are just sitting on the table right now rather than create a new loan program (like the new ARC loan program with $255 million to help maybe 10,000 businesses with only up to $35,000 per business). The ARC loan program is merely a drop in the bucket of capital for America’s small businesses. Allowing the SBA to free-up some of the billions already approved could make a significant difference . . . only $255 million and only $35,000 per business is nearly an insult to the 6.5 million small businesses with over 5 employees . . . ground zero for economic growth in America.

This change to the SBA 504 loan program is a small step in the right direction — they’ve finally started to put the 504 on par with the 7(a) program in terms of refinancing, which is long overdue. But the SBA will have to fully lift the restriction on refinancing in order to have the impact they want (and we all need) to have for America’s small businesses. I’ll write about a possible, easy solution (H.R. 2527) in my next post . . . so stay tuned.


  1. Michael says:


    The 504 is definitely a good program. What I am not sure if you are aware of is the fact that many banks are faced with having to call loans on good paying borrowers due to the fact that they need to meet reserve requirements.

    I have a program which will help with this challenge, but am having difficulty getting audience with the right people with either The American Banker’s Association or directly with members of Congress or The Senate.

    I am obviously curious to see what your idea to help promote the 504 program. Perhaps if we can work together we can make both our ideas come to fruition.

    Best Regards,

    Michael Sabler

  2. Russ Rodgers says:

    Can you do ARC loans? I agree with you completely with regard to the 504 loans. Where does the USDA fit in with all of this?

  3. Bob Coleman says:


  4. Joe Arie says:

    Good job Chris. I was on the call with Mills announcing the program. I stated it is a good move but the SBA must move forward with allowing SBA 504 refi’s without restrictions on expansion. Chris Crawford agreed and said NADCO is working on it. Later in the day ABA called me and interviewed me. Attached is the article American Banker wrote.

    Let’s keep after this and maybe something will get done that is desperately needed.

  5. Linda Popp says:

    U are the best thank u so much.

  6. Barry Rothstein says:

    Congratulations, Chris

    I just happen to get Friday’s NY Times each week so I look forward to reading your contribution.

  7. Dane Basham says:

    Congratulations Chris!

  8. Gene Josephs says:

    Chris, the only people I know who wind up in th NYT are either Liberal or getting married or in Obit column.
    Not very good choices.

    That being said good advertisement for a conservative person and MCC.

  9. Luke Wickham says:

    Congrats, Chris.

  10. Mark Bounds says:

    Thank you Chris.

  11. Lee says:

    Chris..I will read it asap…Congratulations on the exposure!..Sally, my wife, is a small business owner and will be interested, also…Stay well!…Lee

  12. Nick Holm says:

    Hey Chris,

    Congrats! That is really awesome!!

  13. Chuck Siegel says:

    I agree with your comments.

  14. Ed Craine says:

    Great comments Chris. We have a need to get financial help to our small business owners so that our economy can get back on track. Expanded SBA lending guidelines could be a very important component if done thoughtfully.

  15. Dennis Coy says:

    What no one seems to be talking about is, how to do this without the large pre-payment penalty that is imposed on the debenture piece of the deal. I would have to assume that any business that does a 504 deal today would have a fixed rate debenture that is lower than one taken out several years ago. So how do you address the investor ( holder of the debenture )who is looking to maintain his yield of say 7-8 % on his 504? We have tried on several occassions to refinance the bank’s portion to add additional debt to it, and most times were not successful getting the CDC 504 guys to allow for the new additional debt to go ahead of their 2nd mortgage, although it made perfect ecomonic sense in terms of saving the borrower some interest costs and debt service.

  16. Ann Hutchens says:

    I’ll have to do some studies on this, Chris. I’ve used our own money to grown Creating Divine Order and am going to need more funding to grow. BTW, I’ve brought on a Director of Operations as well as our Director of Marketing so I’m wondering how I’m going to pay their salaries. It is a scary time to move forward…my word “scary”, however, is an indicator that I’m responding from the fearful feelings of my childhood. Having grown up in a family of 8 children with a single mother at the helm we always worried about whether there was going to be enough money.
    That points again to my need to research and be prepared to use resources that do exist.
    Thanks for sharing your wisdom and experience,

  17. Kristina Donegan says:

    So excited!

  18. Ernesto says:

    Congratulations Chris!

  19. John Pamer says:

    I do pretty well with 7A loans, but I have been discouraged from using the 504’s by the various banks I’ve worked with in the past. For the most part the complaint has been the SBA underwriting as opposed to the bank underwriting. There are a lot of opportunities for using the 504 program IF we can re-fi debt and expand the business at the same time. I am thinking specifically about doctors, veterinarians, and dentists… let me know what you think. I’m finishing a 7A now for $2MM and when that is done I can move on to the next project.

  20. Maureen Woodruff says:

    Good article Chris. Thanks for speaking out with the facts.

  21. Brad Serot says:

    Congrats on the pub Chris!

  22. Chuck Blakeman says:

    As of August 26, exactly 12 ARC loans have been closed in Colorado, and w/ the further obstacles the banks have all thrown in the path of this program, it is not likely there will be any more.

    This has been nothing but a photo op for politicians to pretend once again that they are helping small businesses.

    A big part of this problem is that there is no small business advocacy in Washington. The SBA “serves” every business w/ less than 500 employees, which includes 99.97% of all businesses in America. With that kind of scope, do we really think the SBA is paying attention to true small businesses under 50 employees? Under 20?

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