SBA SOP 50 10 8.1, C.Ch1.A — Primary Program Eligibility Factors

SOP 50 10 8.1 C.Ch1.A

Effective 2026-10-01 · publisher's stamp for this provision

A. Primary Program Eligibility Factors A 504 Project must achieve at least one of the following Economic Development Objectives: 13 CFR §§ 120.860, 120.861, and 120.862 1. Job Creation or Retention (Dollars per Job) requirements as follows: a. A Project must create or retain one job opportunity per $95,000 guaranteed by SBA except that, in the case of a Project of a Small Manufacturer (defined as a small business with its primary NAICS Code in Sectors 31, 32, and 33 with all its production facilities located in the United States) or a project that meets an Energy Public Policy Goal, the Project must create or retain one job opportunity per $150,000 guaranteed by SBA. b. For Projects that are eligible under 13 CFR 120.862, “Other economic development objectives,” a CDC’s portfolio must reflect an average of one job opportunity for every $150,000 guaranteed by SBA; and c. For Projects in Alaska, Hawaii, state-designated enterprise zones, empowerment zones, and enterprise communities, labor surplus areas (as determined by the Secretary of Labor), and for other areas designated by SBA (which include Opportunity Zones), the CDC’s portfolio may average not more than $150,000 per job created or retained. 2. Other Economic Development Objectives and Public Policy Goals A Project that achieves one of the Community Development or Public Policy Goals listed in 13 CFR § 120.862 is eligible if the CDC’s portfolio of 504 loans, including the subject loan, meets or exceeds the CDC’s required job opportunity average as described in Paragraph b. below. Loan applications must indicate how the Project will meet the specified economic development objective. 13 CFR § 120.862 a. Additional guidance for the Energy Public Policy Goals authorized by 13 CFR § 120.862(b)(11-13): Energy Public Policy Projects: Projects meeting the requirements in i., ii., or iii. below are Energy Public Policy Projects. The Energy Public Policy Projects described in subparagraphs i. and ii. below are eligible for the loan amounts described in Paragraph D.1., Debenture Limits, below (hereafter referred to as “Eligible Energy Public Policy Projects”). Note: The terms in subparagraphs ii. and iii. below have the meanings given those terms under the Leadership in Energy and Environmental Design (LEED) standards for green building certifications. For additional information on LEED Certification, see https://new.usgbc.org/leed. i. Projects for the reduction of existing energy consumption by at least 10%. This category may not be used for Projects involving new businesses. In addition, if this project involves: a) The construction or acquisition of a facility: i) The new facility must replace an existing facility. ii) The energy consumption at the existing facility must be compared with the new facility, and the Applicant must be able to demonstrate that the new facility will use 10% less energy than the existing facility. The energy consumption between the two facilities must be compared for energy consumption on a square footage basis. iii) The new facility must be located in the same local area (e.g., the same city, town, county, zip code, metropolitan statistical area or as otherwise deemed appropriate by SBA). b) The retrofit of an Applicant’s existing facility, the retrofit must reduce the energy consumption of that facility by at least 10%, regardless of the energy usage of any other facilities that the Applicant may operate; or ii. Renewable energy sources that generate more than 15% of energy used at Project Facility. a) This category includes plant, equipment, and process upgrades of renewable energy sources such as the small-scale production of energy for individual buildings or communities’ consumption, commonly known as micropower, or renewable fuel producers including biodiesel and ethanol producers. b) Each Project must generate more than 15% of the energy used by the Applicant at the Project facility. In addition, all improvements or equipment required to generate the renewable energy or renewable fuels must be included in the 504 Project costs; or iii. Increased use of sustainable designs. Increased use of sustainable designs, including designs that reduce the use of greenhouse gas emitting fossil fuels or low-impact design to produce buildings that reduce the use of non-renewable resources and minimize environmental impact. iv. With respect to paragraphs i. and ii. above, the Applicant must document the Energy Public Policy Project’s compliance through either an energy audit, engineering report, or other professional evaluation, as deemed appropriate by SBA, that is based on the annual energy usage at the facility or facilities (measured in actual energy usage, e.g. kilowatt hours, therms, or gallons, as applicable, not in dollar costs), and that, at a minimum, includes the following: a) A description of the facility or facilities; b) The current energy usage; c) The projected energy usage, which must be based on all modifications and retrofits to building(s), and all installations of, and replacements and retrofits to, equipment; and d) The qualifications of the party performing the energy audit, engineering report, or other professional evaluation, each of which must be performed by an independent third party (by an entity other than the Applicant, the interim lender, the Third Party Lender, or any of their respective affiliates). b. A CDC’s portfolio must maintain a job opportunity average of one Job Opportunity created or retained for every: i. $95,000 guaranteed by SBA; or ii. $150,000 guaranteed by SBA for Projects located in Special Geographic Areas (Alaska, Hawaii, State-designated enterprise zones, empowerment zones, enterprise communities, Opportunity Zones2F2F2F, and labor surplus areas) A CDC may choose to separate these loans from the remainder of its portfolio for the purpose of calculating the averages. iii. Loans to Small Manufacturers and eligible Energy Public Policy Projects are excluded from this average. 3. If the 504 Project cannot satisfy any of these Economic Development Objectives and guidelines described above, then the amount of the debenture must be reduced to meet the job creation or retention requirement.

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