Wojtowicz Testimony

Issuer: Congressional materials
Document type: Wojtowicz Testimony
Date: 2025-09-17
Case: Wojtowicz Testimony

Summary

Written testimony titled Using the 504 Program to Build America's Manufacturing Future, submitted to the U.S. Senate Committee on Small Business & Entrepreneurship on September 17, 2025 by Jean Wojtowicz, Executive Director of Indiana Statewide CDC, addressed to Chair Ernst and Ranking Member Markey. It describes the SBA 504 Loan Program's structure of a 50 percent bank loan, a 40 percent SBA-backed debenture and a 10 percent borrower equity injection, a maximum manufacturer loan of $5.5 million, and terms compared with conventional commercial real estate loans. The testimony recommends raising the manufacturing loan size to $10 million under S. 1555, cutting the equity injection to five percent under S. 2662, raising regular 504 loan limits from $5 million to $7.5 million, and ending the extra equity for special purpose properties. It also urges separating the 504 and 7(a) programs.

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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 & Entrepreneurship

September 17, 2025

Submitted by:

Jean Wojtowicz
Executive Director
Indiana Statewide CDC
Indianapolis, IN

1
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 the

Certiﬁed Development Company (CDC) lending industry to discuss the Small Business

Administration’s (SBA’s) 504 Loan Program, which is ﬁrmly focused on economic

development and job creation.

My name is Jean Wojtowicz, I am the Executive Director of Indiana Statewide CDC.

Through this entity we have funded more than $750 million to over 1,500 Indiana

businesses including many manufacturers and companies located in rural areas of our

state. These loans leveraged more than $2.2 billion in total investment by these Indiana

businesses. I also am a past Chair of NADCO’s board, the trade association that advocates

for the 504 Loan Program and I currently serve on the board of Eagle Compliance, the ﬁscal

agent that sells the debentures that fund the SBA portion of 504 loans.

CDCs are organizations certiﬁed by the SBA to create jobs and grow businesses in

local communities. We do this through delivery of the SBA’s premier economic

development program, the 504 Loan Program. Many CDCs also deliver other federal

programs through the U.S. Treasury, the U.S. Department of Commerce, and U.S.

Department of Agriculture, and CDCs were designated Community Financial Institutions

(CFIs) to do our part to provide critical capital to small businesses during the COVID-19

pandemic. Finally, CDCs deliver a variety of state and local programs and resources to

meet the needs of the businesses we serve. In fact, CDCs are required to provide

2
investments in economic development initiatives in their area of operations beyond their

participation in the SBA 504 program.1

The 504 Loan Program CDCs deliver is an example of a successful public private

partnership with the banking partner providing a loan for 50 percent of the project, the CDC

providing the SBA-backed debenture covering 40 percent of the project, and the borrower

providing a 10 percent equity injection. This structure provides numerous beneﬁts to small

businesses who want to grow and create jobs:

The 504 portion of the loan is only 40 percent of the total project cost, which

means the total capital investment of each 504 loan is much larger. For example, the

maximum loan size for a small manufacturer is $5.5 million, which means the total project

cost/capital investment could be $12 million. For projects larger than $12 million, the 504

portion caps at $5.5 million while the third party lending partner takes the balance of the

ﬁnancing. If Congress increases the 504 loan maximum, borrowers can better beneﬁt from

the program’s favorable ﬁxed long term rate and term.

On March 10, Administrator Loe ler kicked o the SBA’s Made in America tour in

Indianapolis at Aeordyn Engineering who utilized the 504 Loan Program four times to

support their growth and expansion. She was joined by Senator Young and Senator Banks

as well as our Governor, your former colleague, Senator Braun. Aeordyn Engineering is a

precision manufacturing and engineering company that specializes in small batch

manufacturing, design, and testing of various rotating engine hardware and slip rings in the

1
Standard Operating Procedure 50 56 1 – Part 1, Section B, Ch 1, pg. 64 SOP 50 56 1 on SBA.gov

3
aerospace sector that have signiﬁcant defense sector applications. The company has 95

employees at two locations ﬁnanced by the 504 program with the vast majority working

highly skilled jobs in the manufacturing facility. It is companies like Aeordyn that are the

backbone of growth, innovation, and the creators of jobs for citizens all over our country.

The SBA 504 Loan Program is uniquely able to fund the needs of these critical businesses

by providing long term ﬁxed rate ﬁnancing to support their growth.

The 504 loan provides terms not available conventionally. The 504 program is

serving businesses and providing ﬁnancing unavailable in the private market with a loan

structure that o ers ﬁxed-rate, long-term capital that lenders typically cannot provide for

commercial real estate. The chart below illustrates the di erences between the terms for a

conventional commercial real estate loan versus the SBA’s 504 loan.

Feature Conventional CRE Loan SBA 504 Loan

Term 5–20 years (balloon) Up to 25 years (no balloon)

Equity Injection ~25% 10%

Rate Type Variable Fixed

50/40/10
Structure Full lender exposure
(Lender/SBA/Borrower)

Further, the 504 structure supports liquidity retention and working capital preservation

by enabling borrowers to preserve cash through a low down-payment, which is a critical

feature of the program. This retained liquidity helps borrowers better manage cash ﬂow

ﬂuctuations that come with growing and expanding a business and provides the capital
4
necessary for them to increase their employment, consistent with the programs’ economic

development goals.

Finally, the eligible use of proceeds for the 504 loan are focused on ﬁxed assets:

the purchase, construction, remodeling, or expansion of real estate and large

equipment. The structure, terms, and use of proceeds of the 504 loan are uniquely suited

to the needs of small manufacturers. According to the SBA’s most recent data from 2021,

the U.S. had over 600,000 small business manufacturers employing nearly ﬁve million

workers with payroll over $277 billion.2 The CDC lending industry is proud of the work we

are doing to support these manufacturers, and we know the 504 Loan Program can do

more. My recommendations for maximizing the 504 program fall into two categories:

policies speciﬁc to the manufacturing sector, and those applicable to all 504 borrowers

that correlate with manufacturing policies.

First, the CDC lending industry supports increasing the manufacturing loan size

for borrowers accessing the 504 Loan Program to $10 million as outlined in the Made in

America Manufacturing Finance Act of 2025 (MAMFA) (S. 1555) helmed by Chair Ernst and

cosponsored by this Committee’s Senators Coons, Young, and Hickenlooper. This statutory

change would provide real leverage for the program to support the scaling of domestic

manufacturing since a $10 million 504 loan could support a total project cost of up to $25

million and because the 504 program already engages in larger projects due to the

structure of the loan product, it is uniquely suited to capitalize on this statutory change for

the beneﬁt of manufacturers.

2
Manufacturing Infographic Series 2025

5
Second, Congress should expand access to the 504 Loan Program and enable

manufacturers to retain more capital by reducing the borrower equity injection from a

required 10 percent to ﬁve percent. Manufacturing is capital-intensive and reduced

equity requirements will encourage investment and job creation and help preserve the

critical working capital these companies need for greater expansion. This policy objective

has enjoyed bipartisan support as part of the 504 Modernization and Small Manufacturer

Enhancement Act (S. 2662) most recently introduced by Senators Klobuchar and Young,

and which previously passed this Committee in 2023. This bill also requires SBA resource

partners, like Small Business Development Centers (SBDCs), to conduct outreach speciﬁc

to manufacturers. I would add to this requirement the recommendation that SBA, resource

partners, and industry coordinate a marketing e ort to increase engagement and

education on the manufacturing opportunities through the 504 program, which will also

increase education about the program generally.

Third, Congress should increase the loan limit for regular 504 loans from $5

million to $7.5 million. Like manufacturing loans, the regular 504 loan limits were last

adjusted in the Small Business Jobs Act of 2010 (P.L. 111-240). Since that time, we have

weathered a pandemic, inﬂation, and skyrocketing construction costs. With over 60

percent of 504 loans involving construction, the current loan limits do not go nearly as far

as they did in 2010. While the emphasis on manufacturing loans is timely, leveraging the

504 program and its job creation focus to support all borrowers through a regular 504 loan

increase will contribute to a dynamic small business economy that boosts national

6
competitiveness. Indexing the 504 loan size – both regular and manufacturing – for inﬂation

would also make the law much more durable for long-term small business support.

Fourth, Congress should eliminate the additional ﬁve percent equity injection

required for borrowers with designated “special purpose properties.” This provision is a

good example of lack of durability in the law that adversely impacts borrowers. As

discussed earlier in my testimony, the general structure of the 504 loan is a 50/40/10 split,

with the borrower providing a 10 percent equity injection and preserving liquidity for

business growth. However, in certain cases, the Small Business Investment Act requires

additional equity from the borrower. One instance is if the borrower’s business is

designated as “special purpose” (i.e. farms, certain dental, veterinarian and medical

operations) and one is for businesses under two years old. In each of these instances, the

borrower must contribute an additional ﬁve percent.

The special purpose requirement was implemented in 1996, and SBA’s charge o

data since then shows these properties do not present higher credit risk. This special

purpose penalty applies to many manufacturers in Indiana, since properties with railroad

access (needed by many heavy manufacturing operations) are considered special purpose

and therefore require an extra ﬁve percent downpayment (making the downpayment as

much as 15 percent, which is prohibitive). The extra ﬁve percent equity injection should still

be required for new businesses less than two years old since historically these businesses

do present higher credit risk. Eliminating this penalty for special purpose properties

improves borrower access to a ordable ﬁnancing and removes a requirement that picks

winners and losers.

7
Fifth, Congress should pass amendments ﬁled by my home-state Senator Young

in this Committee in 2023 to ensure the 504 Loan Program is appropriately delineated

from the 7(a) Loan Program. In the late 1980s, the SBA began coupling the 504 and 7(a)

programs in regulation and Standard Operating Procedure (SOP) where previously they

were governed separately. In that process, SBA applied the “credit elsewhere test,” which is

the main eligibility requirement for the 7(a) program, to the 504 program. The 504 Loan

Program’s eligibility requirements are economic development focused: the borrower must

create jobs or meet a congressionally speciﬁed public policy or community development

goal to obtain a loan. The consequences of coupling the programs and applying the “credit

elsewhere test” to the 504 program include a one-size-ﬁts-all approach to two separate

programs that negatively impacts 504 borrowers.

For example, SBA has elaborated on the credit elsewhere test in the past to include

the consideration of a borrower’s personal resources, which makes sense in the context of

the 7(a) Loan Program. However, the structure of the 504 loan is intended to help borrowers

preserve liquidity through a low downpayment – when the same consideration of personal

resources is applied to these borrowers, they are penalized and divested of one of the

primary beneﬁts of the program or have their loan application denied. In the case of

manufacturing borrowers and increasing the loan size to $10 million, the CDC lending

industry has major concerns that consideration of personal resources will result in

undercapitalizing manufacturers trying to grow and stymieing the e ectiveness of the

increased loan size. Senator Young’s amendments from 2023 would make clear these

eligibility requirements do not apply to the 504 Loan Program and would also require the

8
SBA to separate the 504 and 7(a) programs in regulation and SOP to ensure each program

has tailored rules that help them best meet the needs of small business borrowers.

Finally, SBA should prioritize streamlining processes and delegation of certain

activities to CDCs, some of which my fellow witnesses will discuss, to make sure the 504

program and SBA are best positioned to smoothly adopt an increased manufacturing loan

size and avoid delays in the approval process. Additionally, streamlining and delegation to

CDCs will allow SBA sta to focus on larger, more complex manufacturing loans, which will

require more e iciency and speed of delivery than currently occurs in the program.

Enacting the above recommendations will make the SBA 504 Loan Program more

e ective, more impactful, and easier for small businesses to access, thereby allowing

more small businesses to grow, create jobs, and support a strong economy. The 504

program is a highly successful public private partnership with the SBA, CDCs, and private

sector lenders. Since 1986, the program has assisted over 200,000 small businesses with

almost $140 billion in 504 loans, nearly $400 billion in capital investment, and 3.3 million

jobs in local communities around the country. And notably, CDCs have delivered this

strong record of success while maintaining strong program performance with a one-year

charge o rate of 0.08 percent according to the most recent data from SBA. In closing, I

appreciate your leadership in calling this hearing to discuss the SBA’s premier economic

development program, the 504 Loan Program, and the opportunity to provide policy

suggestions to make an already successful program as impactful as possible. Thank you

and I look forward to answering the Committee’s questions.

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Wojtowicz Testimony

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