S 2662119th CongressIntroduced

504 Modernization and Small Manufacturer Enhancement Act of 2025

Introduced: Aug 1, 2025

Financial Services

Standard Summary

Comprehensive overview in 1-2 paragraphs

The 504 Modernization and Small Manufacturer Enhancement Act of 2025 would overhaul several aspects of the SBA 504 loan program to make financing for small manufacturers more accessible and flexible. Key changes include expanding policy goals to emphasize workforce development, minority/women/employee ownership, energy efficiency and disaster-area revitalization, and very small firms (10 or fewer employees). It would raise the maximum loan size for manufacturing projects, broaden closing flexibility for certified development companies (CDCs), and create new requirements and supports for small manufacturers through enhanced assistance, revised leasing rules for project facilities, and targeted collateral and down payment adjustments. The bill also adds oversight and guidance mechanisms (including designated attorneys and resource-partner training) and requires a future impact report. In short, the bill aims to modernize the 504 program to better serve small manufacturers, reduce barriers to capital, and attach workforce and community development objectives to the financing process, while increasing loan sizes and providing additional closing, oversight, and assistance tools.

Key Points

1Expanded policy goals for the 504 program
2- Adds a new emphasis on workforce development (training programs of at least 12 weeks, either in-house or via contracted training for open positions).
3- Codifies expanded support for minority-owned, employee-owned, women-owned businesses, energy efficiency/renewable energy, disaster-area revitalization, and very small firms (10 or fewer employees).
4Higher loan size for manufacturing projects
5- Increases the manufacturing loan amount cap by raising the related section from 5.5 million to 10 million, expanding the size of projects that can be financed.
6Improvements to 504 loan closing procedures
7- Allows accredited lender certified companies to take certain closing actions, such as reallocating project costs up to 10% of total project cost, correcting names, adding eligible passive and operating companies, adjusting addresses, and changing or adding lenders/guarantors under defined rules.
8- Establishes a defined role for “accredited lender certified company” to streamline closing.
9Closing and oversight framework (new Sec. 511)
10- Reorganizes SBA district counsels’ duties post-enactment, moving certain closing-package review responsibilities away from district counsels and assigning file reviews to the SBA Office of Credit Risk Management.
11- Creates a designated attorney framework for closings, with possible continuing education requirements, and a 180-day window for CDCs to appoint a designated attorney if they don’t have one at enactment.
12Special provisions for small manufacturers (Sec. 5)
13- Adjusts the contribution (down payment) requirements for small manufacturers, creating explicit lower-down-payment options and ceilings tailored to converter small manufacturers (with tiers based on duration in operation and project type).
14- Prohibits additional collateral beyond what is specified for small manufacturers.
15- Refines debt refinancing rules to accommodate small manufacturers, including expansion cost considerations.
16- Raises the debenture cap to up to 50% of the project cost (from the prior arrangement) for debentures issued to small manufacturers.
17Expanded manufacturer support and training (Sec. 6)
18- Requires SBA district offices to partner with at least one resource partner (e.g., Small Business Development Centers, Women’s Business Centers, SCORE, Veteran Business Outreach Centers) to train manufacturing firms on applying for the 504 program and related processes.
19Leasing rules for new facilities and existing buildings (Sec. 7)
20- For new facilities: allows an assisted small business to lease up to 20% of the project to tenants if certain occupancy and time-to-occupancy milestones are met; for small manufacturers, the occupancy threshold is lowered to 50% of the project.
21- For existing buildings: permits leasing up to 50% of the project if the business occupies at least 50%, with an exception that allows higher leasing past 50% under specific conditions (annual examinations and anti-investor certifications).
22- Residential leases must be limited to 1 year; commercial leases to 5 years.
23- Requires a five-year post-enactment performance review and reporting on how these leasing changes affect access to capital.
24Reporting and oversight built-in
25- Requires a report to Congress within five years evaluating the leasing and capital-access impacts and considering applying similar audit/notice/certification requirements to the standard 7(a) program.

Impact Areas

Primary group/area affected- Small manufacturers (especially those with 10 or fewer employees) and CDCs/authorized lenders participating in the SBA 504 program. The bill directly changes loan sizes, down payments, collateral expectations, and closing procedures that govern 504 financing.Secondary group/area affected- SBA district offices and the Office of Credit Risk Management (due to reallocation of certain review duties and new oversight roles).- Certified Development Companies (CDCs) and their designated attorneys, who gain new closing responsibilities and education requirements.- Resource partners (SBDCs, Women’s Business Centers, SCORE, Veteran Business Outreach Centers) that would partner with SBA district offices to provide training on the 504 program to manufacturers.Additional impacts- Encourages workforce development and in-house or partner-led training as a condition/strength of funded projects.- Promotes energy efficiency and renewable-energy considerations in funded projects.- Potential changes in real estate structure for funded projects due to expanded leasing provisions, which could affect project economics and risk profiles.- A future impact assessment required by law to gauge effects on access to capital and whether similar oversight or certification changes should be extended to other SBA loan programs.504 loan program: SBA financing typically pairing a private lender (often a bank) with a CDC to provide long-term, fixed-rate financing for major fixed-asset purchases like real estate or equipment. Debentures are the SBA-backed securities issued to fund the program.“Small manufacturer” (defined in the bill using existing SBA definitions in section 501(e)(7)) is given special treatment in down payments, collateral, refinancing, and loan guarantees.“Accredited lender certified company” refers to a certified development company that meets SBA criteria and can implement streamlined closing actions under the new rules.

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