504 Program Lending Authority Grows 50% for 2005-2006

President Bush has signed an appropriations bill (HR 2862) that increases 504 loan program lending authority to $7.5 billion for FY 2006. This assures another year of uninterrupted availability for 504 loans, and anticipates a significant increase in 504 lending.

“This is a tremendous success for the program and our industry, since it provides us with sufficient loan authority for as much as 50% growth for 504” according to Frank Witchey, President of the National Association of Development Companies (NADCO). “It also will provide a cushion for potentially uncertain loan demand, as the gulf coast begins to rebuild many thousands of small businesses. Note that we used essentially all available program authority in FY 2005, so this authority cushion is a welcome change” added Witchey.

“Over the past few months we have been working with the Appropriations subcommittees to increase the 504 program level authority for FY 2006” said Witchey “The President's budget introduced earlier this year had proposed to cap 504 at $5.5 billion. The House Appropriations bills (SSJC) capped our program at $6 billion, and the Senate bill proposed a ceiling of $7.5 billion in its authorizing bill”

The language in the final authorizing bill passed by Congress (HR 2862) simply references the authorization language to determine the overall program level in the 504 program. Thus, there will be $7.5 billion in budget authority for the 504 program in FY 2006.