WASHINGTON, July 24, 2015 /PRNewswire-USNewswire/ -- A lending authorization cessation that affects the Small Business Administration's 7(a) loan program, does not include other SBA lending programs – specifically the 504 Loan, Microloan, Intermediary Lending Pilot and Disaster Loan programs – that the agency plans to actively issue during the interim 7(a) loan shutdown, according to the National Association of Development Companies (NADCO), the SBA 504 lender trade association.
In this decision affecting thousands of businesses nationwide, the SBA announced July 22 that its 7(a) lending will be suspended until the new fiscal year unless Congress raises the program authority cap prior to October 1.
One of the SBA programs that will continue operations is the SBA 504 lending program, which funds long-term, fixed assets for small businesses. Assets include commercial real estate and equipment, with low-cost, fixed-rate financing. As SBA's flagship program for small business fixed-asset financing, 504 lending provides a strong benefit to both banks and borrowers by allowing borrowers to preserve cash with a low down payment, and banks to take a senior position on fixed assets that help grow their communities.
"When people hear that one aspect of SBA lending has shut down, they assume that all lending has shut down, and that is not that case," said NADCO CEO, Barbara Vohryzek. "We want to assure people that the SBA 504 program is still open for business."
The trade association continues its calls for swift resolution due to the significant negative economic and financial impacts the 7(a) loan program shutdown will have on small business owners, community lenders and NADCO members actively participating in the small-dollar 7(a) Community Advantage program that primarily supports underserved markets.
Until Congress passes legislation or the new fiscal year begins, NADCO and its certified development company (CDC) members stand ready to help as many small businesses as possible through SBA 504 small business lending.
The National Association of Development Companies (NADCO) is the trade association of SBA lenders including Certified Development Companies (CDCs), nonprofit companies that have been certified by the Small Business Administration (SBA) to provide financing for small businesses under the SBA 504 Program. NADCO represents nearly 240 CDCs, serving all 50 states. In 2014, the industry provided $4.2 billion to nearly 5,700 U.S. small businesses.
SOURCE National Association of Development Companies (NADCO)