S.B.A. 504 LOANS
SBA 504 "The Money that Makes America Work"
The SBA 504 Loan Program was begun in 1986 to provide Low down payment, fixed-interest rate, long term financing for eligible small businesses to expand their fixed assets. This program allows small business to
"pool" their requests and receive rates comparable to large, international corporations on Wall Street's bond market. Look at the advantages that SBA 504 gives you, the small business owner!
Lender Participation: "Bank" lends up to 50%, SBA
504 lends up to 40%, and the business injects 10%. (This is
the ideal breakout for an existing, non-specialized business.
If the business is a start-up or has a limited-use, then the "business"
participation can be as high as 20%)
Loan Size: Minimum Project size is $200,000 with no maximum project size, but a limitation on SBA participation of $1,000,000 per borrower.
Business Eligibility: Any for-profit business that has a tangible net worth less than $6 million and an average net income after taxes of $2 million or less.
Eligible Project Costs: Land, land improvements (i.e. grading,
landscaping, parking lots, sidewalks, curb and gutter), buildings
(including improvements to HVAC and plumbing), machinery & equipment
(with 10 year life), furniture & fixtures (as a minimal part
of the total project), professional fees (i.e. engineering, architectural,
environmental, interim interest and loan origination costs, title,
appraisal, utility hook-ups), contingency (not to exceed 10% of
The project is funded by having the "bank" lend all of the project costs, with the exception of the borrower's injection, through an interim loan. This loan stays in place through construction completion. After occupancy of the property, SBA will close it's request for bond funding and the bond is funded 45 days later. All interest costs from start of construction through funding date are financed through the project.
Loan Terms: The loans can be made for terms of either 10 or 20 years depending on the components of the project and/or the desire of the borrower.
Loan Rates: The loans are funded on Wall Street through the bond market and are subsequently subject to changes in that market until the loan is actually funded.
Once the project is funded that rate is fixed for the life of the loan.
Owner Occupation: The project premises must be occupied by the borrower's business to the following extent: Existing building – 51% and a newly constructed building – 67%. The balance of the space
can be leased on a permanent basis.
Job Creation/Retention Requirement: The business should create
and/or retain one FTE job for every $50,000 loaned by the S.B.A.
for the project. This creation and/or retention has a two-year window
Have other questions? Go to our Frequently
Asked Questions section.
* * * NOTICE
* * *
IMPORTANT INFORMATION ABOUT
WHEN OBTAINING A SBA 504 LOANS
To help the government fight the funding
of terrorism and money laundering activities, Federal law requires
all Certified Development Companies to obtain, verify, and record
information that identified each person who applies for a SBA 504
What this means for you: When you apply for
a SBA 504 Loan, we will ask for your name, address, date of birth,
and other information that will allow us to identify you. We may
also ask to see your driver's licenses or other identifying documents.