504 and the Candidates: Where Do They Stand?

Let’s put the partisan smokescreens about flip-flopping and Iraq aside and examine the real, key issue in the presidential election: the 504 Loan Program.

Because the 504 Loan Program is a zero subsidy program that creates jobs, drives economic activity and generates wealth, most candidates (presidential or otherwise) are in favor of it. However, President Bush and John Kerry differ on the fate of the 7(a) program, which certainly has an impact on 504 loans.

For example, President Bush would like to end government subsidies for the 7(a) program. The administration has proposed moving to a zero-subsidy plan for 2005, which means that the 7(a) program would be operated via fees – not a government appropriation. SBA says such a move will streamline the program, reduce the burden on taxpayers, and stabilize funding.

If Bush wins and this plan reaches fruition, more borrowers will take advantage of 504 loans because the 7(a) will no longer be advantageous (or even possible) for deals exceeding $1 million. Clearly, this would be a victory for the 504 program.

But not so fast. John Kerry has been an ardent supporter of small business for many years. He is ranking member of the Senate Committee on Small Business and Entrepreneurship (John Edwards is a member too) and says that he will increase government support of SBA loan programs.

Clearly, a Kerry White House will also be well educated about the many benefits of SBA loans, and we know that anyone who knows and understands the 504 program becomes a supporter of it.

From the 504 program perspective, the race may also be too close to call.