Small manufacturers and startups would find it easier to get capital for modernizing and expanding their operations under a bill to expand a key Small Business Administration (SBA) loan program.
The Strengthening Investment to Grow Manufacturing in America (SIGMA) Act, sponsored by Congressmen Tim Ryan (D-OH) and Tom Reed (R-NY), would increase the amount manufacturers could borrow, hike the loan guarantee rate and reduce the amount startup companies would have to put down to qualify.
504 loans provide financing for fixed assets like buildings and machinery. The financing is provided by SBA and private banks, with a minimum contribution from the businesses themselves.
“Small manufactures strengthen our economy and manufacturing industry,” Ryan said in a statement. “But the lack of access to capital negatively impacts U.S. manufacturing’s ability to modernize equipment, grow businesses, and create jobs.”
Reed called it a “no brainer,” saying these manufacturers often struggle to access to capital “needed to give them a fair chance to grow, expand and create new jobs.”
Specifically, the SIGMA Act would
- increase the maximum loan guarantee rate to 90% and increases the loan limit to $10 million for manufacturers;
- reduce or eliminate guarantee fees on small manufacturers, depending on the size of the loan;
- decrease the amount new manufacturers (less than two years of operation) from 15% and to 5% of project financing; and
- expand education assistance in navigating