Great news for lenders who use the 504 program! Recent changes have led to yet another benefit of using the SBA 504 loan program to assist your small business borrowers: All 504 loans now qualify for Credit Under the Community Reinvestment Act.
How, you might ask? On October 24, 2023, the Federal Reserve, the FDIC, and the OCC issued a Final Rule amending the agencies’ Community Reinvestment Act (CRA) regulations.
In the Final Rule, any bank loan made in conjunction with the SBA 504 loan program will automatically qualify as economic development and meet the Community Development Financing Test for CRA credit. This includes bank loans made for the interim financing and the permanent, third party “504 front end” loan. This Final Rule is effective April 1, 2024.
As detailed under the Final Rule heading beginning on page 191 - click here, SBA 504 lending qualifies businesses as small under the SBA size standard test. Further, loans made in conjunction with WBD under the 504 program presumptively qualify under the purpose test of the regulation-promoting job creation or retention.
Should you have any questions or wish to discuss specific opportunities, please don't hesitate to reach out to your WBD loan officer. Thank you for your partnership and commitment to fostering small business growth!
