December SBA 504 Rates

Community Reinvestment Act (CRA) Enhancements

The Federal Reserve, FDIC, and OCC’s Final Rule, effective April 1, 2024, revises the CRA regulations, notably impacting bank loans in conjunction with the SBA 504 loan program. This presents a significant opportunity for banks to enhance their community investment profiles:

1. Integration with SBA 504 Program: Loans under the SBA 504 program are now automatically recognized as economic development, aligning with the Community Development Financing Test for CRA credit.

2. Expanded Community Development Category: The rule introduces a broader scope of support, including government-related, intermediary, and other assistance for small businesses and farms.

3. Loan Qualification Criteria: Loans to small businesses and farms must satisfy specific size and purpose tests to qualify as economic development initiatives.

4. New Retail Lending Test: This allows more flexibility, as loans to small businesses with up to $1 million in annual revenues can qualify for CRA credit, expanding the range of eligible lending activities.

5. Dual Test Eligibility: Loans may be eligible under both the Community Development Financing and Retail Lending Tests, offering more avenues for CRA credit.

Banks looking to leverage these new opportunities are encouraged to contact TCM Certified Development Company. TCM can provide expertise and assistance in navigating the SBA 504 loan process, ensuring compliance with the new regulations and maximizing the community and economic development impact. This collaboration can greatly benefit banks seeking to strengthen their community investment efforts while supporting small businesses and local economies.