504 Modernization and Small Manufacturer Enhancement Act of 2026
Sponsored By: Representative Velázquez, Nydia M. [D-NY-7]
In Committee
Summary
This bill would modernize the SBA 504 loan program. It focuses on workforce training, disaster-recovery priorities, and changes to closing, leasing, and oversight to help small manufacturers and other small businesses access capital faster.
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- Small businesses and small manufacturers get new eligibility and program goals. Businesses must either keep a documented in-house training program of at least 12 weeks or contract for applicants who completed at least 12 weeks of training. The bill explicitly adds a disaster-recovery emphasis for areas within 5 years of a disaster and expands focus on firms with 10 or fewer employees.
- Borrowers face new leasing rules that change how much space can be leased. New projects may permanently lease up to 20% if the borrower occupies 60% of the project or 50% for small manufacturers, with timelines to increase occupancy. Existing building rules limit leased occupancy to 50% with a conditional exception up to 66%. Residential leases may be up to 1 year and commercial leases up to 5 years.
- Certified development companies and lenders get more closing flexibility and clearer oversight. Lenders could reallocate up to 10% of project cost and make limited corrections at closing. The bill defines accredited lender certified companies, creates "Priority" CDCs with designated attorneys, requires attorney training and malpractice insurance, and shifts certain file reviews to the Office of Credit Risk Management with a 180-day implementation window.
- The SBA must create a marketing and outreach plan for 504 loans and implement it within 1 year. A five-year report will analyze how the changes affected access to capital for small businesses.
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Bill Overview
Analyzed Economic Effects
5 provisions identified: 2 benefits, 0 costs, 3 mixed.
Credit elsewhere carve-out for CDC loans
The bill would change the "credit elsewhere" test so it would not block loans under 7(a)(13), financings under the Small Business Investment Act, or other Administrator loans to certified development companies. If enacted, this would preserve SBA flexibility to support CDC lending, including in disaster-affected areas.
Outreach and priorities for 504 lending
The bill would require the SBA to develop and start a marketing and outreach plan for 504 loans within one year. It would also make assisting firms with 10 or fewer employees and projects in disaster-declared areas a stated program priority for five years after a disaster, with one-year extensions allowed.
Training requirement for 504 projects
The bill would add a workforce development goal for 504 projects. A participating small business would need either a documented in-house training program of at least 12 weeks or a contract to hire applicants who completed at least 12 weeks of relevant training.
Faster 504 loan closings
The bill would let accredited certified development companies fix small closing errors and reallocate up to 10% of a project's cost to finish a 504 loan. It would create "designated attorneys" who must be licensed, insured, and trained to close loans for Priority CDCs. Beginning 180 days after enactment, file reviews for loans closed by designated attorneys would move from district counsels to the Office of Credit Risk Management.
New leasing rules for 504 projects
The bill would tighten and clarify occupancy and leasing limits for 504-funded projects. For new facilities, borrowers would need to occupy at least 60% (50% for small manufacturers) and could permanently lease up to 20%; they would plan to reach 80% occupancy within 10 years and add occupancy within 3 years. For existing buildings, borrowers could lease up to 50% if they occupy 50%, with a narrow exception to lease up to 66% if pre-application occupancy, post-assistance use, CDC notice, monitoring, and anti-investor certifications are met. Residential leases would be limited to one year and commercial leases to five years.
Sponsors & CoSponsors
Sponsor
Velázquez, Nydia M. [D-NY-7]
NY • D
Cosponsors
Rep. Williams, Roger [R-TX-25]
TX • R
Sponsored 9/14/2026
Rep. Tran, Derek [D-CA-45]
CA • D
Sponsored 9/16/2026
Rep. Cisneros, Gilbert Ray [D-CA-31]
CA • D
Sponsored 9/16/2026
Roll Call Votes
No roll call votes available for this bill.
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