What is an SBA 504 Loan? Step-by-Step Typical 504 Structure What is an SBA 7(a) Loan?
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What is an SBA 504 Loan?


What Can an SBA 504 Loan Used For?

  • Land acquisition and improvements
  • Construction of new facilities
  • Purchase of existing or build-to-suit facilities
  • Renovation or restoration of existing facilities
  • Equipment and machinery purchases

How to Qualify for an SBA 504 Loan?

Eligible Business:

  • Must be an operating for-profit business
  • Must be a legal entity such as a corporation, partnership, sole proprietor, LLC, etc.
  • Must use the financing for a project located in the U.S.
  • Must have a tangible net worth of less than $7 million and profits after tax of less than $2.5 million for the previous two years
  • Business owner must be a U.S. citizen or resident alien with a green card
  • 51% owner occupancy for existing building purchases, 60% owner occupancy for new construction

Ineligible Businesses:

  • Not-for-profit businesses except sheltered workshops
  • Businesses engaged in lending as banks and finance companies
  • Insurance companies, however, an insurance agency is eligible
  • Businesses located in a foreign country or owned by aliens
  • Businesses selling through a pyramid plan, illegal businesses
  • Businesses engaged in loan packaging
  • Business engaged in political or lobbying activities and speculative businesses

SBA 504 Loan Amount Up to:

Lender    CDC      Total

  • $1.88 + $1.50 = $3.38 Million
  • $2.50 + $2.00 = $4.50 Million (Women & Minorities)
  • $5.00 + $4.00 = $9.00 Million (Manufacturers)

Key Advantages of the SBA 504 Loan:

  • Low down-payment
  • Fixed rate on the SBA 504 portion
  • Long term
  • Low interest rate

Time for Processing:

  • Approximately 2 Months

Comparison Table of SBA 504 and 7(a) Loan Program:

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