The Small Business Administration (SBA) announced at NADCO’s recent Spring Summit that the Office of Management and Budget (OMB) has cleared the way for the issuance of 25-year debentures in the SBA 504 Loan Program. This structure has long been sought by the industry to provide its small business borrowers a longer-term option in addition to the existing 10- and 20-year loan products. Improved cash flow is of vital interest to all businesses, especially those served by the 504 program, and the longer maturity is a vehicle that can serve that purpose. The announcement was very well received by Spring Summit attendees.
The new 25-year debenture is a FY 2018 initiative, and the details are being finalized by the SBA and other parties involved in the debenture funding process. While specifics of the timeline for the launch of the 25-year debenture were not discussed, due to the number of parties involved in this new issuance, it is likely the launch will not occur until after the first quarter of FY 2018.