HR5763-119

What This Bill Does

This bill amends the Small Business Investment Act's section 502 criteria for SBA 504 loans used for plant acquisition, construction, conversion, or expansion. It strikes clauses (ii) and (iii) from section 502(3)(C), adds "or" at the end of the remaining clause (i), and redesignates clause (iv) as clause (ii). It also amends section 502(3)(B)(ii) so the cross-reference points only to clause (i) of subparagraph (C), rather than clauses (i), (ii), or (iii).

Because section 502 is the SBA 504 development-company loan program, the practical effect is to simplify the statutory eligibility criteria used for certain plant and facility projects. The bill does not appropriate new money or create a new loan program. It changes how the existing 504 loan statute identifies qualifying projects, which can affect small businesses seeking financing and certified development companies packaging loans.

Who Benefits and How

Small businesses seeking SBA 504 loans benefit if the simplified criteria reduce barriers for plant acquisition, construction, conversion, or expansion financing. Certified development companies benefit from a cleaner statutory test when structuring 504 projects. SBA 504 loan officers benefit from fewer cross-referenced criteria to apply in eligibility reviews. Small manufacturers benefit if facility acquisition or expansion loans become easier to qualify for. Local economic development officials benefit if more small-business facility projects can use 504 financing.

Who Bears the Burden and How

SBA 504 program staff must update guidance, forms, eligibility review instructions, and lender communications to reflect the revised criteria. Certified development companies must retrain loan packaging staff and adjust underwriting checklists. SBA oversight staff must monitor whether the narrower cross-reference changes program risk or loan mix. Competing commercial lenders may face more SBA-backed competition for facility-finance deals. Applicants still must satisfy remaining SBA 504 requirements, collateral standards, fees, and project-review obligations.

Key Provisions

• Modifies section 502(3)(C) of the Small Business Investment Act by striking two existing criteria.
• Provides a simplified remaining clause structure for plant acquisition, construction, conversion, or expansion projects.
• Redesignates the former clause (iv) as clause (ii).
• Modifies section 502(3)(B)(ii) to reference only clause (i) of subparagraph (C).
• Provides no new appropriation or new loan program, only revised eligibility wording for the existing SBA 504 framework.