St. Patrick’s Day is days away. So I think it’s a good time to tell you about one of last year’s regular meetings of the “Order of Ancient SBA Lenders.”

Since the meeting was on St. Patrick’s day, a discussion of “The Myths of Green 504 Loans” was on the agenda. I was the first presenter, and I discussed a myth I’d heard recently: that a Green Loan still had to meet the SBA’s 504 job creation goal.

I don’t know where that came from. The SOP says that a 504 Project must meet an Economic Development Objective. Reducing energy consumption or generating a certain level of energy through renewable resources is one of the Economic Development Objectives listed on page 454 of SOP 50 10 6 as long as the CDC’s portfolio, including the subject loan, meets the required job opportunity average.

Now, that doesn’t mean that both the portfolio and the project must meet the job opportunity average. That would make it harder to conserve energy, which is not our national objective. Instead, the outstanding CDC portfolio, with the addition of the proposed Green 504 loan, must satisfy the overall job opportunity average.

My colleague John then shared another myth that was making the rounds: that there was virtually no limit to the number of Green Loans a borrower can have. Everyone knows, or should know, that $5.5 million is the largest a single green debenture can be, and that the outstanding Gross Debentures issued for a small business concern, including affiliates, for Eligible Energy Public Policy Projects must not exceed $16.5 million in the aggregate.

But John had confirmed that although it’s not stated in the SOP, the maximum number of Green Loans a borrower can have is three. So if a borrower has two Green Loans, each with $2 million outstanding, it can have only one more Green Loan for a total of three loans, regardless of whether the total dollars outstanding might be a far cry from $16.5 million.

At that point, the chair noted that we had exceeded the agenda’s presentation time. We adjourned the meeting and went to the pub next door to celebrate St. Patrick’s Day. And points well taken!

Richard Jeffrey
Senior Associate, CDC/504 Program