Testimony of Hilda Kennedy, AmPac Business Capital — Senate Small Business Committee, September 17, 2025

Summary

Written testimony titled Using the 504 Program to Build America's Manufacturing Future, submitted by Hilda Kennedy of AmPac Tri-State CDC, Inc., dba AmPac Business Capital, to the U.S. Senate Committee on Small Business and Entrepreneurship on September 17, 2025. The testimony describes AmPac's work as a Certified Development Company partnered with the Small Business Administration since 2007, and states it has provided more than $2 billion in 504 loans. It states the program's job test is one job for every $90,000 borrowed, or $120,000 for manufacturers. Its recommendations include raising the manufacturer lending limit from $5.5 million to $10 million under the proposed Made in America Manufacturing Finance Act of 2025, raising the regular 504 limit from $5 million to $7.5 million, removing a $16.5 million cap on energy-related 504 loans, and piloting a five percent down payment.

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Using the 504 Program to Build America’s
          Manufacturing Future
                 Written Testimony before the

                         U.S. Senate

     Committee on Small Business and Entrepreneurship



                     September 17, 2025



                         Submitted by:

                        Hilda Kennedy

                       Founder/President

     AmPac Tri-State CDC, Inc., dba AmPac Business Capital

                         Ontario, CA




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Chair Ernst, Ranking Member Markey, and distinguished members of the Committee,

thank you for inviting me to join you today. I am honored to represent AmPac Tri-State

CDC, alongside my CDC colleagues, to discuss the Small Business Administration’s (SBA)

504 Loan Program, the Agency’s premier economic development program.



My name is Hilda Kennedy, and I am the Founder and President of AmPac Tri-State CDC,

doing business as AmPac Business Capital. I am also a board member of our industry

trade association, the National Association of Development Companies (NADCO). I

established AmPac as a 501(c)(3) nonprofit in 2005, and this year we proudly celebrate 20

years of service to our community. AmPac is headquartered in Ontario, California, in the

Inland Empire region, which encompasses Riverside and San Bernardino Counties—two of

the largest counties in the nation by square miles and together, the 13th largest

metropolitan statistical area in the United States.



AmPac has enthusiastically partnered with the SBA as a Certified Development Company

(CDC) since 2007, established with a commitment to target those who “own and control

little productive capital,” as stated in the Small Business Act of 1953. In so doing, AmPac

intentionally engages the faith-based community as one of our key outreach targets

because of the historical significance of faith communities being a center for education,

economic empowerment, and community.




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Our mission is to finance and foster small business success from cradle to legacy. We are

committed to intentionally engaging small business owners with strong community ties to

galvanize economic development and the creation of healthy local communities. This year,

we will host our 17th Annual Connecting Faith & Business Summit, which continues to

serve as a vital platform to reach purpose-driven entrepreneurs who seek to illuminate

integrity, hope, and opportunity.



In addition to our 504 lending, AmPac has served as an SBA Microlender since 2016 and

became an SBA Community Advantage lender, now a CA SBLC, in 2021. We are also a

certified Community Development Financial Institution (CDFI) and a Community

Development Entity with the U.S. Department of the Treasury. As a CDFI, AmPac provides

financing, technical assistance, and trusted relationships in communities where

traditional lenders have often stepped back. Thus in 2021, we launched our Entrepreneur

Ecosystem to provide holistic support for small businesses—offering community,

coaching and capital to help them thrive, especially as they recovered from the impacts of

the pandemic.



Through our partnership with the SBA, AmPac has leveraged its 504 Loan Program to

provide more than $2 billion in loans, resulting in the creation of over 7,700 new jobs. Over

the past two years, our CDFI down payment assistance program has leveraged $3.3 million

in private social impact investment to finance more than $64 million in commercial real

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estate loans for women, Black and Latino entrepreneurs, as well as first- time commercial

real estate buyers. In addition, we have funded $26 million in Community Advantage 7(a)

loans and $4.4 million in SBA Microloans.



I would like to expand upon my colleagues’ testimony by focusing on the eligibility

requirements of the 504 program, provide recommendations to ensure program

requirements are leveraged, and discuss policy areas that would modernize and allow

more borrowers to access the 504 Loan Program.



The 504 Loan Program is designed to provide long-term capital for economic growth. It can

be used to finance or refinance fixed assets such as real estate and large equipment, and

its eligibility requirements are rooted in economic goals. To qualify, a small business must

create or retain one job for every $90,000 borrowed ($120,000 for manufacturers) or meet

one of the program’s public policy or community development goals. These goals are

authorized by Congress and include objectives such as supporting manufacturers and

revitalizing business districts.



To better fulfill Congress’s aim, I join my colleagues in strongly supporting the proposed

Made in America Manufacturing Finance Act of 2025 (MAMFA). Increasing the lending limit

from $5.5 million to $10 million for manufacturers is essential, particularly in high-cost

states like California. In a recent roundtable AmPac hosted with the Federal Reserve Bank

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of San Francisco and several manufacturing CEOs, leaders shared that their future growth

depends on investing in automation and advanced equipment—investments that often

require millions of dollars. I also recommend raising the regular 504 Loan Program lending

limit from $5 million to $7.5 million, as the program caps were last adjusted in 2010.

Modernizing 504 loan limits will enhance access to capital for growing small businesses.

Clean energy is also a critical and growing component of the manufacturing sector that

would also benefit from such an increase. Manufacturing and clean energy are a winning

combination for small businesses, for our economy, for our environment and for creating

livable wage jobs, which brings to me my next point.



Congress authorized multiple policy goals prioritizing energy efficiency. These goals

include:

   •   reducing energy consumption by at least 10 percent

   •   increasing the use of sustainable designs that reduce the use of nonrenewable

       resources and minimize environmental impact; and

   •   upgrading plant, equipment, and processes involving renewable energy sources.



The energy public policy goals are delivering meaningful results in California. Let me share

the example of Dahdoul Textile, a family-owned wholesaler and retailer of discounted and

liquidation consumer goods in Los Angeles. They have used SBA financing to purchase six

buildings and have created new jobs with each expansion. AmPac financed four of these

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projects. For their most recent acquisition in 2024—a 27,318 square-foot building in West

Covina, formerly a Big Lots store—they leveraged the 504 Energy Public Policy goal. The

project included the installation of solar panels to generate greater than 15% of the energy,

as required, but the borrower opted to add more solar to obtain the benefit of greater cost

savings since the store location will operate 11 hours a day, 7 days a week. In 2025, the

business expanded again and utilized the SBA 504 Energy Public Policy goal to facilitate

the purchase of another retail store that was a former Big Lots in the city of Victorville, CA.

The loan is in the process of closing and will include solar panels to generate energy

savings for the business in a high desert community known for cool winters and hot

summers. Sixteen new jobs will be created. Like the other store, the purchase benefits the

community by revitalizing the shopping center, filling vacant space, and adding new jobs.

The business plans to continue to grow with the goal of purchasing more vacant stores and

adding solar for the benefit of renewable energy and lowering costs.



Another project example that bears sharing is Summerset, located in Reno, Nevada. After

successfully using the 504 program to open facilities in California, the company identified

a site in Reno where they could develop a 63,700-foot memory care facility with assisted

living residences. The $30 million project was supported with a $5.4 million SBA 504 loan

leveraging the energy public policy goal. The business added 72 new jobs, and a

photovoltaic solar system, which continued Summerset’s commitment to sustainability

through renewable energy.

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Recommendation: In the newest version of SBA’s Standard Operating Procedures (SOP)

effective June 1, 2025, SBA implemented a $16.5 million cap on energy-related 504 loans. I

recommend agency leadership remove this cap, as it threatens to limit the ability of

businesses like Dahdoul and Summerset to expand, modernize facilities, reduce energy

costs, and create jobs. Eliminating the cap would ensure that small businesses can fully

leverage renewable energy investments for long-term growth and sustainability.



Another area I would like to discuss is the 504 program’s basic loan structure. As my

colleague noted, typically, the program follows a 50/40/10 model: 50 percent financing

from a private lender, 40 percent from the CDC/SBA, and 10 percent equity from the

borrower. However, many small businesses, especially first-generation entrepreneurs, and

first-time commercial real estate buyers, struggle to meet the 10 percent down payment

while still preserving the working capital necessary to operate and grow. At AmPac, we

launched our “It Is Possible” downpayment assistance loan program to support

businesses with liquidity replacement.



One of my favorite success stories of this initiative is Jerry’s story. Jerry is the owner of

Riggins Urban Barber College, a navy veteran from San Diego. Jerry needed help to fulfill

the dream of commercial real estate ownership. A first-generation entrepreneur and a first-

time commercial real estate buyer who has dedicated his life to giving young men and

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women a second chance by training them in barbering, his program provides students not

only with technical skills but also with entrepreneurial training, empowering them to build

businesses of their own. As the demand for enrollment grew, his leased space in a

shopping center could no longer accommodate the students, which led him to look for a

second location. His financials were strong enough to qualify for the loan, but the down

payment would leave him without operational cash. AmPac’s assistance provided liquidity

replacement, restoring critical cash to support his expansion and to hire four new

employees for the new location.



Recommendation -- Establish a pilot program under the 504 Loan Program to allow first-

generation entrepreneurs and first-time commercial real estate buyers, who own and

control little productive capital, to qualify with a five percent down payment. This

adjustment would open the door for more small businesses to invest in commercial real

estate, build equity, and create jobs, directly advancing the goals of the Small Business Act

of 1953 to strengthen the economic well-being of our nation. For context, the 504 Loan

Program is the only SBA lending program with a statutorily required down payment of 10

percent (and in some cases, 15 or 20 percent). A five percent down payment would act as a

floor, not a ceiling, and allow CDCs the flexibility to make credit decisions that make sense

for the borrower while maintaining the level of underwriting and servicing that resulted in a

0.21 percent default rate in FY 2024.




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Next, I want to address the SBA’s treatment of “special purpose properties” under the 504

Loan Program. Certain industries and property types are automatically designated as

“special purpose,” requiring an additional five percent equity injection. This designation

often creates a significant barrier to entry without clear data supporting the higher

requirement. For example, an urgent care practice would be considered special purpose.

This is an essential service in the community, and it is common for medical groups to add

an urgent care because of limited medical services in a community.



Recommendation: Remove the additional five percent borrower contribution required for

SBA-designated “special purpose properties” in the Small Business Investment Act (SBIA).

Data compiled by NADCO shows the charge-off rates for these properties are comparable

to the rest of the 504 portfolio, which has a historically low one-year charge-off rate of just

0.08 percent. Eliminating this penalty would ensure that essential community-serving

businesses, such as dental and urgent care practices, are not unfairly excluded from

affordable 504 financing.



I also want to highlight a recent change to SBA’s Standard Operating Procedures (SOP) that

has impacted our ability to serve small businesses. The new SOP requires that SBA

financing be limited to businesses 100 percent owned by U.S. citizens, U.S. Nationals, or

Lawful Permanent Residents (LPRs). While I fully support ensuring SBA resources serve

U.S. citizens, this change has negatively impacted our ability to serve businesses that

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create jobs and provide services in our communities and are majority-owned and

controlled by U.S. citizens, U.S. Nationals, and LPRs.



One such business is a private school in Orange County, founded by three partners—all

U.S. citizens except one Canadian minority owner with a 6.5 percent stake. The school,

inspired by the explorer Marco Polo, was created to foster curiosity, adventure, and

discovery among its students. The school’s leaders—all U.S. citizens—were seeking to

secure a $12 million 504 construction loan to expand their facilities and meet growing

demand from local families. But because of the new citizenship rule, the project halted

and the borrower, as of last week, was still trying to find an affordable financing solution.



I also want to share the story of Lorimar Winery. Starting their business in 2009, the local

owners fulfilled a dream in 2012 when they obtained an SBA 504 loan to complete the

construction of a winery in beautiful Temecula, CA and celebrated the opening with the

community. In 2025, with the same ownership, the Winery was seeking to refinance high

interest real estate debt from an expansion, and to pull cash out for eligible business

expenses. The majority ownership of the winery remained the same as 2012, however, one

of the partners passed away and his non- U.S. Citizen spouse retained his ownership

shares. With the citizenship SOP changes, this minority Canadian citizen-partner with 37%

ownership in the Winery, the same as 2012, impacted the eligibility of the majority U.S.

citizen, who lives in the local community, from obtaining the fixed rate SBA 504 refinance

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and the cash out option. This $6.8 million refinance would have supported the four existing

jobs and the seasonal jobs for events hosted at the winery throughout the year but was

unable to move forward.



Recommendation: Restore the previous SOP language that allowed SBA financing for

businesses majority-owned and controlled by U.S. citizens or LPRs. Minority ownership by

non-citizens has not shown to increase risk to the program, and U.S. citizen entrepreneurs

should not be denied access to capital because of the citizenship status of a small

minority partner.



In conclusion, the SBA 504 Loan Program is one of the most powerful tools we have to help

small businesses grow, create jobs, and build generational wealth through

entrepreneurship and commercial real estate ownership. With thoughtful adjustments—

modernizing 504 loan size limits for manufacturing, along with clean energy

manufacturing, and the regular 504 program; lifting caps on energy projects, supporting

first-generation entrepreneurs and first-time commercial real estate buyers, removing

unnecessary barriers for special purpose properties, and restoring practical citizenship

eligibility, this program and the SBA will fulfill the congressional intent of the Small

Business Act of 1953, which is reinforced in the preamble of the Small Business

Investment Act of 1958:




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           “It is declared to be the policy of the Congress and the purpose of this Act to

           improve and stimulate the national economy in general and the small-business

           segment thereof in particular by establishing a program to stimulate and

           supplement the flow of private equity capital and long-term loan funds which

           small-business concerns need for the sound financing of their business

           operations and for their growth, expansion, and modernization, and which are

           not available in adequate supply…”1



On behalf of AmPac and the thousands of small businesses we have had the privilege to

serve, I thank Ranking Member Markey for the honor of inviting me to testify, Chair Ernst for

your leadership in calling this important hearing, and all members of the Committee for the

opportunity to discuss the 504 Loan Program today. I deeply appreciate your commitment

to strengthening America’s small businesses—the backbone of our economy—and to

ensuring they have the resources necessary to succeed and thrive.




1
    Small Business Investment Act of 1958

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