Job Creation & Public Policy Goals for SBA 504 Projects

The SBA 504 loan program is designed to support job creation and retention while fostering small business growth by financing fixed assets for eligible businesses. According to SBA SOP 50 10 7.1, the SBA’s “How To” manual, a 504 project must achieve at least one of the following economic development objectives: Job Creation/Retention or meeting Public Policy & Community Development Goals.

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Job Creation/Retention

• Job Requirements:?Create or retain at least one job per $90,000 of project debenture ($140,000 for small manufacturers and projects meeting energy public policy goals).

• Job Definition:?A Job Opportunity is defined as a full-time (or equivalent) permanent job created within two years of receiving 504 funds or retained because of a 504 loan.
• Location Flexibility:?Jobs don't need to be at the project facility, but 75% must be in the community where the project is located.
• Job Retention:?Can be claimed if it can be reasonably shown that jobs would be lost without the project.
• Reporting:?CDCs must estimate job creation/retention at the application stage and report actual figures two years after loan disbursement.

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Example: If a business buys a building for $1,000,000 and finances $500,000 with a bank and $400,000 with the SBA, the business will need to generate/retain a minimum of 5 jobs (SBA rounds upwards). $400,000/$90,000 = 4.44 (5 jobs)

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Community Development & Public Policy Goals

If Job Creation/Retention requirements aren't met, a project must fulfill one of the goals outlined in 13 CFR § 120.862 (the government's Code of Regulations referenced in the SBA SOP), including some of the objectives below.

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Public Policy Goals

• Geographic Growth & Recovery Revitalize business districts with a redevelopment plan. Aid rural development. Support areas affected by Federal budget cuts or base closings. Lower unemployment rates in labor surplus areas.
• Support for Targeted Groups Expand businesses owned by women, veterans, and minority enterprises.
• Innovation and Sustainability Increase productivity through modernization and robotics. Expand exporting. Modernize facilities to meet health, safety, and environmental standards. Reduce energy consumption by 10% or install approved equipment (i.e., solar panels) to generate 15% of the building’s energy needs. Invest in renewable energy sources like micropower and biofuels.

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Community Development Goals

• Economic Enhancement Improve, diversify, or stabilize the local economy. Stimulate business development. Bring new income into the community.
• Sector Assistance Support manufacturing firms (NAICS Sectors 31–33). Assist businesses in Labor Surplus Areas

(defined by the Department of Labor).

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Community Business Finance is an expert in SBA qualification – we explore each applicant’s operations, industry, ownership, and real estate project location in-depth to ensure that the SBA's requirements are met. We would love to partner with you in obtaining SBA 504 financing for your business dreams!

Partnering with Community Business Finance means having the experience, efficiency, and relationships to create a success story for your borrowers.

Contact us today! A Business Lending Consultant is ready to help.

Bill Ebersole

Vince Calicchia

Jeanne Bergeron

La Tisha Venters