FAQs - Stimulus Act Changes

Temporary elimination of fees for the 504 loan program (in place only until $100 million appropriation for loan subsidy & loan modification costs is exhausted, which SBA estimates will be around 12/31/2009.)

• SBA will no longer require a bank participation fee (currently .5% of the bank's permanent mortgage)

• The CDC loan origination processing fee of 1.5% formerly paid by the borrower will now be paid by SBA.

When the $100 million is exhausted, regular bank participation and CDC fees will resume.

Job Creation Ratio Change

The job creation requirement has been changed to one job per $65,000 of SBA loan funds received.

Debt Refinance permitted under limited circumstances:

• The new loan involves business expansion
• Collateralized by fixed assets
• Existing debt incurred for benefit of small business
• Proceeds used to acquire land, to construct or expand building or to purchase equipment
• Borrower is current on all payments of existing debt for one year
• New financing will provide better terms or interest rate
• New financing will be used only for refinancing existing debt, or for costs related to project being financed.

Energy Efficiency Public Policy Goals

Projects that meet one of the following new energy goals are eligible for SBA 504 loans for between $2 - 4 million without needing to create or retain jobs:

Reduction of energy consumption by at least 10% (Qualifies for $4 million)

Increased use of sustainable designs that reduce the use of greenhouse gas and non-renewable resources and minimize harmful environmental impact. (Qualifies for $2 million)

Install equipment and/or upgrades that will process renewable energy sources. (Qualifies for $4 million)

America’s Recovery Capital (ARC) loans

Deferred-payment loans up to $35,000 available effective June 15, 2009, to established, viable, for-profit small businesses that need help to making their principal and interest payments on existing qualifying debt.

Interest-free to Borrower, 100 percent guaranteed by the SBA, with no SBA fees.

Loan funds must be disbursed within six months.

Funds used for payments of principal and interest for existing, qualifying small business debt including:

• Mortgages
• Term and revolving lines of credit
• Capital leases
• Credit cards/notes payable to vendors, suppliers & utilities

Repayment begins 12 months after the final disbursement.

Borrowers pay back the loan principal over a five year period.

ARC loans will be made by commercial lenders, not SBA directly.

For more information please go directly to the SBA’s website: www.sba.gov