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SBA 504 Q&A: Job Creation Requirement for the 504 Debt Refinancing Program

Aug 2016

Q: Does the job creation requirement of one job for every $65,000 lent by the Small Business Administration (SBA) apply to 504 debt refinancing without expansion?

A: Yes, the SBA still has the requirement for job creation when the project request is for the straight refinance of an existing mortgage, just as it does for all 504 requests.

If the borrower does not meet the jobs creation requirement, they may still be eligible for financing if they meet one of the SBA community development goals or public policy goals, other than any of the energy public policy goals, which are not allowed at this time.

Per the CFR Code of Federal Regulations §120.862

Community development goals:

1) Improving, diversifying or stabilizing the economy of the locality;

2) Stimulating other business development;

3) Bringing new income into the community;

4) Assisting manufacturing firms (North American Industry Classification System (NAICS), Sectors 31, 32, 33); or

5) Assisting businesses in labor surplus areas as defined by the Department of Labor.

Public policy goals:

1) Revitalizing a business district of a community with a written revitalization or redevelopment plan;

2) Expansion of exports;

3) Expansion of small businesses owned and controlled by women as defined in section 29(a)(3) of the Act, 15 U.S.C. 656(a)(3);

4) Expansion of small businesses owned and controlled by veterans (especially service-disabled veterans) as defined in section 3(q) of the Act, 15 U.S.C. 632(q);

5) Expansion of minority enterprise development (see §124.103(b) of this chapter for minority groups who qualify for this description);

6) Aiding rural development;

7) Increasing productivity and competitiveness (retooling, robotics, modernization, competition with imports);

8) Modernizing or upgrading facilities to meet health, safety, and environmental requirements;

9) Assisting businesses in or moving to areas affected by federal budget reductions, including military base closings, either because of the loss of federal contracts or the reduction in revenues in the area due to a decreased federal presence; or

10) Reduction of rates of unemployment in labor surplus areas, as such areas are determined by the Secretary of Labor.

If you have a question you'd like our SBA 504 loan experts to answer, email us atinfo@ffcfc.comor call 850.681.3601 or toll-free at 888.320.5504.