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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 $15 million and profits after tax of less than $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
(50%) (40%) (90%)
- $6.25 Mil + $5.0 Mil = $11.25 Million
- $6.88 Mil + $5.5 Mil = $12.38 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:
Comparison Table of SBA 504 and 7(a) Loan Program:
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