The House of Representatives just passed the “Made in America Manufacturing Act,” which would increase the loan size limits of SBA loans from $5million to $10 million for US small business manufacturers.
See the press release from the SBA on the SBA loan for manufacturing.
SBA loan for manufacturing using 504
For borrowers utilizing the SBA 504 program vs 7a program this increase in the loan limit means manufacturers can go up to $25 million project sizes while maintaining the traditional SBA 504 structure.
The reason for this is that the $10 million limit only applies to the SBA portion of the loan. A 504 transaction involves a Senior loan provided by a bank or private lender of up to 50% of the project and a Junior loan provided by the SBA for 40% of the project. The borrower is required to contribute 10% if not a start-up.
In other words this structure is now possible with SBA 504:
$12.5 million Senior Loan
$10 million SBA (Junior Loan)
$2.5 million Equity
Is your small business manufacturer eligible?
Learn more about SBA 504 eligibility here.
What’s next for Made in America Small Business Financing Act?
The bill, which has bipartisan support, will now be considered in the Senate, led by Senators Joni Ernst (R-Iowa) and Chris Coons (D-Delaware).
