Most of the changes affect two popular programs: 7(a) loans, where banks typically provide all of the financing, and 504 loans, where the proceeds are intended for real estate or machinery purchases and financing is split between banks and Certified Development Companies (CDCs). By modifying or eliminating certain requirements, the SBA believes it will expand program eligibility and provide small businesses with improved access to capital.
Here are some of the main changes:
-elimination of the personal resources test, whereby loan applicants were required to furnish information about their personal assets and wealth;
-modified collateral requirements for 504 loans; and
-elimination of the nine month rule for project expenses related to 504 loans.
For more details about these changes, take a look at the SBA’s press release and this article in the Washington Post’s business section.