empowering economic growth

504 loan eligibility

Overall Eligibility Requirements:

When applying for a 504 loan, businesses must meet each of the following requirements:

  • Property must be either owner-occupied or owned by an eligible passive company. Various lease options exist between the proposed borrower/landowner and the tenant/operating entity. Generally, so long as both entities are otherwise eligible under SBA rules and both either are obligated or guarantee the debt, the project is eligible. If questions concerning this issue should arise, they should be directed to the staff of Growth Corp.
  • Project must, according to SBA guidelines, promote economic development. Generally, this entails the creation or retention of jobs. For every $75,000 that Growth Corp lends, or $120,000 for manufacturing concerns, reasonable projections should indicate that one full-time equivalent job will be created or retained over the next two years. Some business sites and types are exempt from job creation criteria and exceptions are possible. Questions concerning this requirement should also be directed to the staff of Growth Corp.
  • The business must be for-profit and together with all affiliates must average less than $5 million in annual profits and $15 million in net worth. (Alternative, higher size standards are available in certain industries, i.e., manufacturing).
  • Total eligible project cost must be at least $125,000. This includes a minimum Growth Corp loan of $65,000. Larger loans are more cost-effective.

Qualifying Projects:

Generally, any project involving the purchase, construction, or improvement of fixed assets is eligible. Examples include:

  • Land and building acquisition
  • Construction and renovation
  • Purchase of heavy machinery or equipment
  • Refinancing real estate and equipment
  • Reasonable contingencies (up to 10 percent), furniture and fixtures, and soft costs (such as professional fees and interest during construction) generally can be included. Investment and residential properties are not eligible.

expansion solutions

Purchase a Building

Construct a New Facility

Renovate Your Current Property

Purchase Heavy Machinery or Equipment

Refinance Commercial Mortgage Debt


Eligible Businesses:

  • Business owner(s) must be a U.S. citizen or resident alien with a green card
  • Any for-profit business
  • Any business structure (Sole Proprietorship, Partnership, Corporation, LLC, LLP, etc.)
  • Any type of legitimate business: manufacturing, wholesale, service, professional service, retail or agricultural
  • By SBA definition the business must be small. This generally means less than $15 million in net worth and less than $5 million in annual after tax profits.

Ineligible Businesses:

  • Private restrictive clubs and speculative real estate investments
  • Businesses primarily engaged in lending (i.e. banks, credit unions, finance companies)
  • Insurance companies, although independent insurance agencies are eligible
  • Offshore facilities
  • Businesses that derive a significant portion of their revenue from speculative operations (i.e. commodity traders)
  • Lobbyists
  • Businesses with more than 1/3 of their revenue from legal gambling


Eligible Expenses:

The project may include land, no matter how long it has been held. The value of the land will be at cost if acquired within two years of application. If the land was acquired prior to that time, the value also will be at cost unless the small business submits a professional appraisal acceptable to SBA establishing a different value. The appraisal should include the sales history of the property during the last five years. A party other than the borrower, its associates, or the present mortgagee must conduct the appraisal.

Land Improvements
Land improvements integral to the project can be included as eligible project costs except those improvements that are to be paid through special tax assessments or user fees. Examples of eligible land improvements are grading, new streets including curbs and gutters, parking lots, utilities, and landscaping.

Building Construction
All construction costs can be considered part of the 504 project cost. If the SBA business loan involves the construction of a new building, a borrower may lease up to 20% of the square footage of the rentable property (total square footage of all buildings or facilities used for business operations) on a long term basis, provided that the borrower immediately occupies at least 60 percent of the rentable property with plans to occupy some of the additional space within three years and plans to occupy all of the remaining space (not leased out) on a long term basis within 10 years.

Purchase of an Existing Building and Building Improvements
The costs to acquire and improve an existing building are eligible provided that the purchase price is supported by an appraisal acceptable to SBA. For a project that is partially leased out, costs for improvements that are an integral part of the structure of the building are eligible project costs. Examples of these costs would be facade expenditures, heating, electrical, plumbing and roofing costs. However, costs in connection with finishing the interior space to be leased out are not eligible. The borrower must occupy at least 51 percent of the rentable property. The balance of the rentable property may be leased out, on a long term basis, to any third party, if the loan proceeds were not used to remodel or convert the space to be leased out.

Machinery and Equipment
All costs associated with the purchase, transportation, dismantling, or installation of machinery and equipment can be considered part of the project cost. (If the project is only for machinery and equipment, the machinery and equipment has to have a useful life of at least 10 years). The costs of dismantling, moving, and installation of equipment may be included if these costs are part of a more comprehensive 504 project. An example would be heavy or highly calibrated equipment (such as a large printing press) which often requires specialty moving services.

Furniture and Fixtures
Furniture and fixtures can be included in the project as eligible project costs if the dollar amount compared to the total project is minimal (less than 10%) and will not affect the maturity based upon a weighted average useful life.

Professional Fees
Expenditures for professional services and fees directly attributable and essential to the project are eligible. Examples are:

  • Legal expenditures for zoning changes, title searches, insurance, and recording fees
  • Engineering and architectural costs, as well as appraisals
  • Environmental costs like site assessments, Phase I and/or Phase II studies
  • Interest and points on the interim construction loan
  • Impact and permit fees and utility hook-up fees
  • Title insurance
  • Flood insurance
  • Recording fees
  • Filing fees and title searches
  • Abstract costs
  • Surveys
  • Certified copies of organizational documents
  • Settlement agent’s fees
  • Certain other expenses may apply

Ineligible Expenses:

Costs that are not directly attributable and necessary for the project may not be paid with proceeds of the 504 loan. These include, but are not limited to, the following:

  • Third-party loan fees (commitment, broker, finders, origination, processing fees of permanent financing)
  • Ancillary business expenses, such as: working capital, counseling or management services fees, incorporation/ organization costs, franchise fees and advertising
  • Fixed-asset project components, such as: short-term equipment, furniture, and furnishings (unless essential to and a minor portion of the project); automobiles, trucks, and airplanes; and construction equipment (except for heavy duty construction equipment integral to a business’ operations and meeting the IRS definition of capital equipment)


SBA recognized Growth Corp as an Accredited Lender after a thorough review of its policies, procedures and prior performance. The prestigious ALP status grants Growth Corp increased authority to process and close 504 loans, which provides expedited processing of loan approvals and closings.

Quality, accuracy and quick turn-around times are just some of the reasons why Growth Corp is the top CDC in Illinois, the largest 504 Lender in Chicago and a top ten 504 Lender nationwide.


How Will You Grow Your Business?

877-BEST 504


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