The New 2021 Stimulus Bill Makes the SBA 504 Loan Even More Attractive

The Economic Aid Act of 2021 includes enhancements and incentives that make the Small Business Administration’s (SBA) 504 Program even more attractive. The 504 loan already had the best terms on the market, but now with debt forgiveness, reduced fees, and more lenient refinance criteria, now is the most opportune time to take advantage of the program. 

Whilthe SBA is still finalizing official regulations of the $900 billion COVID relief package, the legislation contains many provisions that benefit small businesses and will help them recover or continue to grow following COVID-19. 


Three months of debt forgiveness  

The Act appropriates $3.5 billion to extend the small business debt relief program established by the original 2020 CARES Act.  For new SBA 504 loans, approved from February 1, 2021 thru September 30, 2021, borrowers will receive three months of payments subsidies. This means the SBA will be making your loan payments for you and they will not need to be paid back at any time. This loan forgiveness is capped at $9,000 per loan per month. Borrowers with loans that have monthly payments over $9,000 can wire the remainder or negotiate a repayment agreement with their Certified Development Company. 

Fee Reductions 

Fees are drastically reduced for 504 loans approved from the date of the enactment of the new law (December 27, 2020) through September 30, 2021. 

  • Waives 0.5% Third Party Lender Participation Fee – charged on the banks 1st position loan 
  • Waives 1.5% CDC processing fee (historically charged on the SBA 504 loan) 

Enhanced SBA 504 Refinance Loan  

The relief bill implements several enhancements to the SBA 504 refinance loan, such as more lenient eligibility guidelines and an improved cash-out option.  

  • The SBA 504 program can refinance SBA 7a loans 
  • Reduces the required time that qualified debt must be in place for refinance eligibility from 2 years to 6 months 
  • 12 months of current payments is no longer an eligibility criteria but is reviewed as part of the credit decision 
  • For one year from Dec. 27, 2020 borrowers can refinance the first trust deed and take cash out to be used for business needs, rather than exclusively used on their building 
  • Fee reductions and 6 months of debt forgiveness as described above 

The SBA 504 Refinance Program, which allows small business owners to lower their monthly occupancy costs and access capital trapped in real estate, has proven to be a vital tool in helping small businesses on the road to recovery. With these new enhancements to the refinance program, the 504 loan can have an even larger impact.  

Getting Started 

In today’s financial climate small businesses are in need of capital and stability. The SBA 504 loan is one of the most advantageous financing options for small business owners looking to purchase, refinance or construct commercial property and other fixed assets.  It has played a crucial role in helping small businesses recover following the COVID-19 crisis by offering affordable commercial real estate financing with as little as 10% down payment and historically low interest rates, fixed for 25 years.   

Now is the most advantageous time for you to utilize the SBA 504 progra– the rates are unbeatable and the new legislative improvements under the CARES Act can serve as an economic recovery tool for small business owners 

If you’re a small business owner in California, Nevada, or Arizona, TMC Financing can help you get started. Contact us to get prequalify and learn how the SBA 504 Program can help you and your business.

*All SBA 504 information above is subject to full pending SBA implementation guidance – required regulations, notices, and revised forms.  The regulations surrounding a CDC’s ability to refinance existing 504 loans are still being finalized. The SBA is expected to provide more information as soon as it is available. Contact your local CDC for the most up to date information on the CARES Act legislation.