Lender Q&A: What is the 9 month rule and does it still apply?
What is the 9 month rule and does it still apply?
Answer by Tom McHale, Senior Vice President
The 9 month rule relates to SBA 504 loan applications and says that only eligible Project cost expenditures made within 9 months of a loan application are eligible to be included in the financing request. The SBA eliminated this rule in 2014 and now permits expenses to be counted toward a Project regardless of when they were incurred, so long as they are directly attributable to the Project. The elimination of this rule has a definite impact on building construction projects which require significant costs upfront to obtain building permits, etc. Prior to the rule change, delays in the permitting process would render initial soft costs ineligible to be included in the project. The elimination of the 9 month rule allows these costs to be counted toward the Project.