Chu Holds Oversight Hearing on SBA’s 504/CDC Program
Washington, December 10, 2019
Washington, D.C.— Today, Rep. Judy Chu (D-CA), Chairwoman of the House Small Business Subcommittee on Investigations, Oversight, and Regulations, held a hearing on the current state of the Small Business Administration’s (SBA) 504/Certified Development Company (CDC) lending program. The 504/CDC program facilitates small business growth by helping firms secure affordable capital for investments in land, buildings, and fixed assets.
“In Fiscal Year 2018, the number of jobs supported by 504 loans dropped slightly compared to previous years. This raised questions about the program’s performance and the steps we can take to ensure that the 504/CDC program is creating jobs in our communities.” said Chairwoman Chu. “We would like to know what’s working, what’s not, and what we can do to ensure that this program is performing at full capacity.”
Since 1958, the 504/CDC Loan Guaranty program has been backing long-term fixed-rate loans to support investment in fixed assets, like land, buildings, heavy equipment, and machinery. The program is administered by local CDCs, private nonprofit corporations that work with private-sector lenders to provide financing to small businesses. In 2019, the SBA approved 6,099 loans equaling $4.96 billion. The program is also geared toward job creation and requires that borrowers create or retain a minimum of one job per $75,000 of SBA funds received.
The hearing allowed members to hear directly from witnesses from the CDC community regarding their experience with the program. The hearing covered issues like the lingering impact of the government shutdown, expediting low-dollar loans, streamlining the loan closing process, the SBA’s requested increase in the maximum loan amount, and current leasing limitations for 504 businesses.
“By solving these problems [in the 504 program], we will help our small businesses and our economy grow,” said Mary Mansfield, President & CEO of Bay Colony Development Corp. in Waltham MA. “As I stated at the beginning of my testimony, 504 borrowers are statutorily required to create or retain jobs for every $75,000 they receive. The easier it is for responsible small businesses to access this program, the more jobs our country creates.”
“As we all strive to make SBA and its loan programs relevant to a dynamic, changing marketplace and business environment, I remain hopeful that we all share the same goal to better serve America’s small businesses with responsive, relevant, and innovative lending solutions,” said Wayne Williams, SVP & Senior Lending Officer at Business Finance Group Inc. in Fairfax, Virginia. “Reducing burdensome regulation and streamlining and modernizing program delivery will help improve the SBA 504 Loan Program.”
“Small business are the lifeblood of our economy. At the core, small businesses are not inanimate objects – they are people taking ideas and solving problems, people providing meaningful jobs and advancement opportunities to others, people paying taxes to pay for services in our communities, and much, much more,” said Elaine Fairman, Executive Director of Business Expansion Funding Corporation in Charlotte, NC. “If we are willing to improve the 504 program by working together, we can expand our reach and impact.”
“SBA’s loan programs, including the 504 program, are designed to fill the gaps left by the private markets, providing loans to small business owners who cannot afford or obtain loans from conventional lenders,” said Chairwoman Chu. “The 504 program takes this one step further by targeting small businesses with unique capital needs – the purchase of major fixed assets such as land, buildings, and equipment. Ensuring this program is effectively reaching and serving small businesses at this critical stage of growth is a priority of this Committee.”