Manufacturing Loan Cap Jumps to $10M, Easing Rules for Factory Owners and Adding Workforce Training Mandates

The “504 Modernization and Small Manufacturer Enhancement Act of 2025” is essentially a policy makeover for the Small Business Administration’s (SBA) 504 loan program, making it far more attractive and accessible for small manufacturers. This bill is aimed squarely at the factory floor, boosting the maximum loan amount for manufacturing projects from $5.5 million straight up to $10 million (Sec. 3). If you’re a small manufacturer looking to buy a major piece of equipment or expand a facility, this is a huge increase in available capital.

The New Rules of the Factory Floor

Beyond the higher loan cap, the bill cuts down significantly on the financial hurdles for manufacturers. For a small manufacturer, the required owner contribution—the money they have to put down—can now be as low as 5% of the project cost, down from the standard 10% (Sec. 5). For a $5 million project, that’s a savings of $250,000 in upfront cash. Even better, small manufacturers are now exempt from having to provide additional collateral beyond the asset being financed, a major easing of requirements that typically tie up a business owner’s personal assets (Sec. 5).

However, there’s a new catch tied to the loan goals: workforce development. Any small business receiving assistance must now demonstrate they have an internal training program lasting at least 12 weeks, or they must contract with an outside vendor to supply job applicants who have completed a 12-week training program relevant to the open position (Sec. 2). For a manufacturer, this means that while the loan money is easier to get, they now have a mandatory requirement to invest in job training—a provision that could help close the skills gap but also adds an administrative layer to the process.

Less Bureaucracy, More Flexibility

The bill also streamlines the loan closing process for “accredited lender certified companies,” which are essentially pre-approved, experienced lenders. These lenders gain flexibility to make minor adjustments right before closing, such as changing lenders or making small shifts in project costs (up to 10%) without needing to send the whole package back to the SBA for approval (Sec. 4). This should speed up the closing process significantly, reducing the time a business owner spends waiting for paperwork to clear.

To balance this speed, the SBA is shifting oversight: the review of closed loan files will move from local SBA district counsels to the central Office of Credit Risk Management (Sec. 4). While this centralizes oversight, it removes the local review that many relied on, potentially changing how quickly issues are caught or resolved. Furthermore, to ensure manufacturers know about these changes, the SBA is now required to partner with local resource centers—like SBDCs and SCORE—to offer training on how to access these updated 504 loans (Sec. 6).

Real Estate Rules Get a Reality Check

One of the most complex parts of the 504 program has always been the owner-occupancy rule. The bill changes this, particularly for manufacturers. If a manufacturer is building a new facility, they only need to permanently occupy 50% of the space, allowing them to lease out the other half (Sec. 7). This flexibility is huge, allowing a factory owner to build a larger facility than immediately needed, lease out the excess space for income, and expand into it later.

For existing buildings, the rules are even more flexible. A business can now lease out more than 50% of an existing building for up to a year after getting the loan, provided they were already operating there for 12 months prior (Sec. 7). This allows a business to use the loan for renovations while planning to downsize their own footprint. However, if a business leases out more than 50%, the development company must monitor them annually for five years (and every two years thereafter) to ensure they aren't secretly operating as a real estate investment company. This adds a crucial check to prevent subsidized loans from being used purely for profit-driven property investment.