Today, the Biden-Harris Administration announced a new rule aimed at reducing costs for small business owners. The U.S. Small Business Administration (SBA) Administrator Isabel Casillas Guzman revealed that the SBA 504 Loan Program will now allow easier refinancing of debt. This move is expected to help small businesses lower their debt payments and access more affordable capital for expansion or growth.
This development follows the Federal Reserve’s recent rate cut in September, which has already reduced borrowing costs for small businesses. In the SBA’s 7(a) Loan Program, approximately 200,000 borrowers will see a 0.5% reduction in their monthly payments on variable-rate loans starting this month. This reduction translates into an estimated $360 million in annual savings for these borrowers.
President Biden recently stated, “This is a moment […] for business to feel greater confidence to invest, hire, and to expand. It’s a moment for individuals to feel greater confidence buying a home, a new car, starting a family, starting a new business.”
SBA Administrator Guzman emphasized the administration's commitment: “The Biden-Harris Administration is laser-focused on lowering costs for the American people, including the incredible small business owners who make this country run.” She added that coupled with the Federal Reserve interest rate cut, SBA’s new rule would streamline access to debt refinancing and help small businesses reduce payments and access more affordable capital.
The direct final rule was released today and will take effect on November 15.
Key updates from this rule include streamlined regulations governing debt refinancing within the 504 Loan Program both with and without expansion. These changes aim to simplify loan applications and broaden eligibility criteria for small business borrowers.
Specific improvements under this rule include:
- Simplifying program rules to provide greater flexibility and expanding access to affordable capital.
- Making it easier for small businesses to refinance physical property such as land, facilities, and machinery.
- Broadening ways in which loan funds can be used by businesses looking to expand operations.
- Removing requirements that previously mandated demonstrating minimum reductions in loan payments from refinancing.
For example:
- A rural call center could better utilize its land and equipment value when refinancing debt.
- A coffee cafe could refinance existing equipment while upgrading its roasting plant or expanding locations.
- A manufacturing company would have more freedom in deciding whether refinancing makes sense without needing to show minimum payment reductions.
Borrowers may also use 7(a) Loans or other options available through SBA’s Lender Match tool or local SBA District offices. For further information on current interest rates or training resources, individuals are encouraged to visit SBA's official website or consult Eagle Compliance LLC's posted rates.