March 2018
Commercial Lending
SBA Budget Fully Funded for 2018; 25-Year Debentures for 504 Loans Expected to Debut in April

As part of the Omnibus Appropriations Act of 2018, the Small Business Administration (SBA) 504 and 7(a) budget authority will be sufficient to meet demand through Sept. 30, 2018.  Also, the long awaited new 25-year debenture for the SBA 504 Loan Program is expected to debut in April 2018, with the first pools likely in the fourth quarter of FY 2018.

SBA 504 Loan Program25-Year Debentures for SBA 504 Loans

The new 25-year option will still conform to all the familiar guidelines of the traditional SBA 504 Loan Program.  It can still be used for the purchase of land or buildings, building improvements or to acquire fixed machinery and equipment, and will still feature a fixed interest rate with a down payment as low as 10%.

Previously approved loans will not be allowed to switch from 20 to 25-year terms, so anyone looking to do this would need to cancel their 504 authorization and reapply.  Though interest rates for 25-year debentures will remain uncertain until the option is available and in use, the current 20-year debenture pool has enough volume to attract large buyers, thereby reducing the possibility of any major swings in pricing.

This structure has long been sought by the industry to match the terms for most first-lien loans in the SBA 504 loan product and to provide a longer-term option in addition to the existing 10- and 20-year loan products.

SBA Budget Fully Funded for 2018

SBA 504 budget authority for FY 2018 is $15 billion, with half set aside for the permanent debt refinance program.  SBA 7(a) budget authority for FY 2018 is $28.5 billion.  Also, the SBA administrator has the authority to unilaterally increase loan levels by 15% if needed.

The total amount of FY 2018 funding for the SBA is $887 million — the same funding level as FY 2017. (This amount includes $186 million in SBA disaster loan funding that was approved by Congress earlier in the year).  The SBA funding level is $60.5 million more than the administration’s request of $826.5 million for FY 2018 and $53 million more than the administration’s request of $834 million for FY 2019.

The Act also restores proposed cuts to the SBA’s core Entrepreneurial Development (ED) programs.  The legislation provides $247.1 million for ED programs — $54.7 million more than the administration requested in FYs 2018 and 2019.  ED programs, including the Small Business Development Center Network and SCORE, offer free or low-cost counseling and training resources to small business owners.

For more information about SBA 504 loans in Florida, South Alabama or South Georgia, contact a Florida First Capital Loan Officer or email us at  Phone: 850.681.3601 or toll-free at 888.320.5504.