The U.S. Small Business Administration on Tuesday announced proposed measures to simplify the application process for its loan programs, including eliminating the maximum for collateral and revising rules related to affiliations with other companies.
“The changes are the latest steps to reduce paperwork burden, with our eye on the larger goal of expanding access to capital and giving entrepreneurs and small-business owners the financial resources to grow and create jobs,” SBA Administrator Karen Mills said in a statement.
Among the proposed changes is the elimination of the personal resource test in which borrowers are required to obtain a maximum level of personal finance resources for a 7(a) or 504 loan.
Another proposal revises rules that disqualify some companies as small businesses because of their affiliation with other companies. It also would streamline 504 applications and reduce paperwork for 7(a) and 504 applications, SBA officials said.
A third change would eliminate a restriction that businesses only include 504 project expenses for nine months prior to submitting a loan application.
A fourth would increase the accountability of certified development companies’ boards of directors on 504 projects.
The SBA came up with the proposals after consulting with lenders and borrowers, officials said.
“Specifically, these proposed regulations will provide greater access to capital through our two largest loan programs, while also reducing risk to taxpayer dollars,” Mills said.
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