Recovery act transition period

The American Recovery and Reinvestment Act created temporary fee reductions in the SBA 504 Loan Program. The initiative has contributed to a significant resurgence in lending to small businesses. However, based on the activity to date, SBA projects that they will only have funds to support this initiative through late-November 2009. 

November 23, 2009 will begin a transition period where applications for new 504 loans may be submitted either:

1. As Recovery Act loans, which will mean being placed in a queue to await the potential availability of Recovery Act fee reduction funds; or
2. As non-Recovery Act loans, which will be authorized as soon as approved, but which will not be eligible for fee the reduction.

Applications submitted as Recovery Act loans will be processed up to the point of approval and then will be placed into a queue awaiting the availability of funds. Once the appropriated Recovery Act funds are exhausted, some funds are projected to become available again as previously approved loans are cancelled. As funds become available, applications in the queue will be authorized in the order they were approved by SBA. With the exception, that "327" action requests for specific project increases on previously authorized loans will be approved before applications for new loans. At any time while waiting in the queue, an applicant may choose to withdraw and re-submit as a non-Recovery Act loan.

The 504 program will continue to offer unique and attractive benefits, regardless of the changing program fees. Businesses can enjoy a down payment as low as 10%, low fixed interest rate and a loan term. Lenders will continue to benefit from reduced credit risk and a low loan-to-value ratio.

The full and detailed SBA Notice on the transition period can be found below. Contact your local Evergreen loan officer [1]for more information.