Our St. Patrick’s Day eBulletin issued in March 2023 discussed SBA’s Energy Public Policy goal, which allows for a “Green 504 Loan” of up to $5.5 million for eligible projects as long as a business’ total Green 504 Loans do not exceed $16.5 million. It’s been our experience that Green loans are seldom understood and rarely used. That’s unfortunate. “Green” projects are a good thing. And it’s why we’ve chosen to shine a light on them.
Importantly, the $5.5 million per loan and $16.5 million per total green loans are the only regulatory caps. However, over the years, practice has imposed another cap: Limiting a business to no more than three green loans
Now, a Sea Change: SBA’s Eligible Energy Public Policy – Policy Guidance Clarification.* Responding to requests from NADCO and several CDCs, SBA has now provided a “Policy Guidance Clarification” regarding the number of Eligible Energy Public Policy projects, allowing more than three SBA Green 504 projects up to the total SBA exposure of $16.5 million, effective immediately.
How it works. It’s not automatic. This Clarification is in the form of SBA advising NADCO of the exception to the limit of three Green Loans. Key word: “Consider.” Under this Clarification, SBA agrees to consider exceptions to policy requests to increase the number of projects submitted. There is no change to the aggregate of $16,500,000. Lenders are to submit the exception to policy requests “… with the application package to SLPC for review and recommendation to the D/FA … The D/FA will review the exception to policy requests submissions and decisions for future policy considerations.”
Because the Clarification is in the form of SBA advising NADCO, there is no notice or regulation implementing the change. Additionally, there is no enumeration of the criteria SBA will use to consider exceptions. Since there is no policy or regulation involved, we are advising clients to make their “best case” for an exception in the hopes it will be granted.
Meanwhile, the new SOP will be issued shortly and will include the procedures implementing recent regulatory changes. Those changes are scheduled to take effect in mid-May ’23. Spring is in the air, bringing with it the promise of a new SOP.
*April 18, 2023: Eligible Energy Public Policy – policy guidance clarification.” NADCO and CDCs have requested that SBA allow an exception to policy to SOP 50 10 6, page 475, paragraph D.1.c.i., to allow more than three 504 projects to be submitted under the Eligible Energy Public Policy projects. … Please visit www.NADCO.org for all Technical Issues Memos and TechBriefs under the “Regulatory” navigational ta