Sec. 12. Leveraging 504 loans for refinancing and community development lending
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The purpose of this section is to make refinancing loans under title V of the Small Business Investment Act of 1958 ( 15 U.S.C. 695 et seq.) more flexible so that lenders can more effectively and efficiently respond to the needs of small business concerns seeking immediate financing and relief from the economic impacts of COVID–19. Section 502(7) of the Small Business Investment Act of 1958 ( 15 U.S.C. 696(7) ) is amended by adding at the end the following: In this subparagraph— the term borrower means a small business concern that submits an application to a development company for financing under this subparagraph; the term eligible fixed asset means tangible property relating to which the Administrator may provide financing under this section; and the term qualified debt means indebtedness— that— was incurred not less than 2 years before the date of the application for assistance under this subparagraph; is a commercial loan; the proceeds of which were used to acquire an eligible fixed asset; was incurred for the benefit of the small business concern; and is collateralized by eligible fixed assets; and for which the borrower has been current on all payments for not less than 1 year before the date of the application.
A project that does not involve the expansion of a small business concern may include the refinancing of qualified debt if— the amount of the financing is not more than 90 percent of the value of the collateral for the financing, except that, if the appraised value of the eligible fixed assets serving as collateral for the financing is less than the amount equal to 125 percent of the amount of the financing, the borrower may provide additional cash or other collateral to eliminate any deficiency; the borrower has been in operation for all of the 2-year period ending on the date of the loan; the financing will provide a substantial benefit to the borrower when prepayment penalties, financing fees, and other financing costs are accounted for; and for a financing for which the Administrator determines there will be an additional cost attributable to the refinancing of the qualified debt, the borrower agrees to pay a fee in an amount equal to the anticipated additional cost.
The Administrator may provide financing to a borrower that receives financing that includes a refinancing of qualified debt under clause (ii), in addition to the refinancing under clause (ii), to be used solely for the payment of business expenses. An application for financing under subclause
(I)shall include— a specific description of the expenses for which the additional financing is requested; and an itemization of the amount of each expense. A borrower may not use any part of the financing under this clause for non-business purposes. The Administrator may provide financing under this subparagraph for a borrower that meets the job creation goals under subsection
(d)or
(e)of section 501. The Administrator may provide financing under this subparagraph to a borrower that does not meet the goals described in item
(aa)in an amount that is not more than the product obtained by multiplying the number of employees of the borrower by $75,000. For purposes of subclause (I), the number of employees of a borrower is equal to the sum of— the number of full-time employees of the borrower on the date on which the borrower applies for a loan under this subparagraph; and the product obtained by multiplying— the number of part-time employees of the borrower on the date on which the borrower applies for a loan under this subparagraph; by the quotient obtained by dividing the average number of hours each part time employee of the borrower works each week by 40. Notwithstanding section 508(e), the Administrator may not permit a premier certified lender to approve or disapprove an application for assistance under this subparagraph. The Administrator may provide not more than a total of $7,500,000,000 of financing under this subparagraph for each fiscal year. . Section 521 of division E of the Consolidated Appropriations Act, 2016 ( 15 U.S.C. 696 note) is repealed. It is the intent of Congress that the refinancing of existing business debt is an authorized use of a financing under the program under title V of the Small Business Investment Act of 1958 ( 15 U.S.C. 695 et seq.). Section 502(7)(B) of the Small Business Investment Act of 1958 ( 15 U.S.C. 696(7)(B) ) is amended, in the matter preceding clause (i), by striking 50 and inserting 100 .
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