SBA Launches $5 Billion Pilot Program to Finance Rental Housing Construction: Waivers Granted on Job Creation Rules

The new Main Street Home Builders Act of 2025 sets up a temporary, five-year, $5 billion pilot program within the Small Business Administration (SBA). This program, dubbed the 505 Pilot Program, is designed to funnel loans to small businesses—referred to as “covered persons”—specifically for building, improving, or managing "build-to-rent multifamily housing." The goal is straightforward: use targeted financing to boost the supply of rental housing units across the country, with $1 billion available in fiscal year 2026 and increasing to $3 billion annually by 2028.

The New Rules of the Road for SBA Loans

This isn't your standard SBA loan program, and that's where things get interesting. Loans issued under this pilot program are explicitly exempt from two major requirements that typically govern SBA financing. First, the bill waives the mandatory job creation requirements that usually come with these loans (Sec. 2). This means a small builder can get federally backed financing for a project without having to prove they are creating a specific number of jobs, which could speed up projects but potentially reduce the local employment benefit. Second, the bill lifts certain leasing limitations, which makes sense since the entire purpose is to finance rental properties.

Who Gets the Money and Why It Matters

The money is being channeled through State development companies, similar to existing SBA programs. The catch is that the small business receiving the assistance must be the “end user” of the project—meaning they construct or improve the housing and then manage it. Lenders are required to conduct due diligence to ensure the small business has a “proven track record” and “adequate assets” (Sec. 2). This is where the rubber meets the road: while the program targets small businesses, the requirement for a proven track record might tilt the playing field toward established, larger small businesses rather than true startups or those new to the rental market. If you’re a small, local contractor, you need to show you’ve done this before to qualify.

The Housing Supply Mandate

One clear benefit of this bill is the mandatory increase in housing supply. To qualify for funding, every project must result in a net increase of at least one dwelling unit. If a small business constructs a new building, it must create at least one more unit than existed before. If they renovate an existing facility, they must also add at least one dwelling unit (Sec. 2). This provision ensures that the $5 billion in federal backing directly translates into more available housing, which is a necessary step toward easing rental market pressure for everyday people.

The Trade-Offs for Taxpayers

The Main Street Home Builders Act is essentially setting up a dedicated, temporary funding stream for rental housing development, which is great for housing supply. However, it pulls $5 billion from the general pool of funds already appropriated for SBA loans, meaning that capital won't be available for other types of small businesses—say, a local manufacturer or a tech startup—that rely on traditional SBA financing. Furthermore, waiving the job creation mandate is a double-edged sword. It simplifies the process for builders, but it also means that federally subsidized construction projects won't necessarily be tied to local job growth, which is often a key selling point for public financing programs.