WASHINGTON—The Small Business Administration (SBA) has issued a new procedural notice announcing that 504 loans will be funded through debenture sales occurring in April through June 2021, adding the COVID-19 Substantial Adverse Change Remedy Certification and Agreement will continue to be available when the Certified Development Company (CDC) has concluded that there has been a substantial adverse change in a borrower's ability to repay the project financing.
Financing for 504 loans is provided by CDCs, along with third-party lenders and the borrower. Although credit unions are not classified as CDCs, a majority of NAFCU-member credit unions that participate in SBA lending programs offer 504 loans as third-party lenders, NAFCU noted.
In the notice, the SBA pointed to the "unpredictable and recurrent" nature of the pandemic and its adverse effects on the national economy and outlines the conditions and requirements under which CDCs may proceed with the debenture sale. Lenders with questions are encouraged by the agency to contact the lender relations specialist in their local SBA field office.
PPP Loan Update
Relatedly, according to the SBA's most recent paycheck protection program (PPP) data, more than 2.1 million loans have been approved in 2021, totaling more than $156 billion. Since the program began last April, more than 7.3 million loans have been disbursed by 5,469 lenders.
The SBA has also highlighted that that the current round of PPP is "successfully reaching smaller borrowers," with 94% of all loans falling under $250,000. The agency highlighted that credit unions have provided "above program average" PPP loans under $150,000.
Of note, the agency has completed 34% of the loan forgiveness process, totaling 31% of the total 2020 volume of loans to be forgiven, NAFCU pointed out.