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Makeover Magic

The SBA may give its underused 504 loan program a face lift. How will that help you?

By C.J. Prince

Opinions expressed by Entrepreneur contributors are their own.

Considering how tough it is for entrepreneurs to findinexpensive financing, you would think the purses ofgovernment-subsidized programs would be routinely raided. Yet theSBA's 504 Certified Development Company Program--which awardsbelow-market, fixed-rate loans to small businesses for real estateand heavy equipment purchases--has been underutilized every yearsince 1996. In fiscal 2002, for example, Congress authorized $5.4billion for the 504 program, but less than half, $2.5 billion, wasactually used for approved loans.

That has the SBA scratching its head. "This is aonce-in-a-generation opportunity to lock in rates on a 20-year 504loan at somewhere around 6 [percent]," says Jim Hammersley,director of loan programs for the SBA. "With rates as low as they are, morepeople should be taking advantage of that."

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