Bank of America has not released specific details as to why it will not continue to participate in the 504-loan program, stating only that it plans to focus mainly on a more popular SBA 7(a) loan program, which is a less-specific loan plan that does not restrict loans to real estate.
During the first nine months of SBA's fiscal year, BofA made 11 loans in the San Francisco area totaling $8.1 million through the 504 program, under which business owners make a down payment of 10 percent, the bank provides a first mortgage of 50 percent and the SBA provides a second mortgage of 40 percent. However, the 504 program restricts loans to real estate and there has been a significant decline in businesses interested in making real estate purchases.
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