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: