empowering economic growth


How much can I finance?

The 504 portion cannot exceed $5 million or $5.5 million, depending on whether your business meets an approved public policy goal or is classified as a small manufacturer (NAICS codes beginning with 31, 32 or 33). Remember, this limit is for the SBA portion only. There is no overall maximum project size.

What interest rate will I pay on my 504 loan?
The interest rate on 504 loans is determined at the time the 504 debenture pool is sold to the private market and is based on current market conditions, which fluctuate. This typically happens approximately six weeks after your project is fully complete. All SBA 504 loans are funded using the same market sale process, so interest rates in any given month are the same nationwide…regardless of CDC.
Is it possible to purchase real estate and equipment at the same time using the 504 Loan Program?
Yes. There are two ways to do this. We can either prepare two 504 loans: one with a 20-year loan for the real estate and another with a 10-year loan for the equipment. Or, if the weighted useful life of the equipment does not drag the overall life of the project below 20 years, we can prepare a single application that includes both the real estate and the equipment. Your loan officer can walk you through this.
Can I get a second 504 loan?
Yes. Or three. Or even four. You are only limited by the maximum lending limit ($5 million or $5.5 million), not the number of SBA loans.
What are the equity requirements?
Generally, 10% is the standard equity requirement for the 504 Loan Program. That amount increases to 15% if you have owned the business less than two years (a start-up) or if the real estate is considered special-use (for example: hotel, bowling alley, car wash, etc.). A 20% down payment is required in situations involving BOTH a start-up business and a special-use property.
Can I personally hold title to the project property and lease it to my business?
Yes. Individuals, Trusts, LLC’s, Corporations and Partnerships are allowed to hold title to the property as long as 100% is leased to the applicant small business.
Are there occupancy requirements?
Yes. The owner must occupy at least 51% of an existing building. For new construction, the owners must agree to occupy 60% of the building with plans to occupy 80% within ten years.
Can I rent a portion of my building to another tenant?
Yes.  The Operating Company can sublease so long as the occupancy requirements are met.
What should I be aware of that could slow the process down?
  • Life insurance
  • Appraisal
  • Environmental

It’s vital to begin obtaining these items as soon as possible after SBA approval as they can be time consuming.

What Is the Closing Process Like?

Growth Corp’s Closing Team works diligently to ensure your approved projects are funded in a timely manner.  Keep in mind…the following documents will be required to get the closing process started:

  •  Appraisal
  •  Environmental
  •  Title Work
  •  Interim Note and Mortgage
  •  Organizational Docs
  •  Life Insurance Policies…these can be time consuming, so please plan ahead

Additional documents will also be needed to complete our closing book, but can be collected while awaiting closing or at closing.  However, the documents listed above are necessary for our legal department to begin preparing the closing documents.

The timing of funding will then depend on where we are in the current cycle, as we are always working 30-60 days out.  Here’s why…once our legal department gets all the closing documents prepared, our attorneys will schedule a closing.  Post-closing, the complete file is then turned over to the SBA and the loan is pooled with all the other 504 loans funded in the same month.  The pool of loans are sold to investors in the form of debentures…typically on the first Tuesday of every month.  The borrower’s interest rate will be determined from the sale of those debentures and is based on current market conditions.

Once the rate is established, the borrower will receive their amortization schedule and begin making payments to a Loan Servicing Agent.  This corporation handles the payment processing and loan accounting for all SBA 504 loans.  Keep in mind…all questions regarding the loan should still be directed to Growth Corp.  We have an in-house Loan Servicing department available to answer any questions you may have about your payment, interest, or amortization schedule.

What Collateral is Required?
  • The 504 loan is secured with a subordinate lien on all project assets.
  • The 504 loan must have a security interest in all project assets.
  • Existing liens are recognized for building expansions and renovations, but may also be refinanced with a 504.
  • Personal guarantees of all principals owning more than 20% of the company are required.
  • If the business is a start-up, or the asset being financed is considered single-purpose, or the credit is unusually risky, additional collateral may be required.
  • Key man life insurance is typically required unless there is a strong management succession plan.
  • Adequacy of collateral is a credit decision – additional collateral can be required by Growth Corp or SBA.
How is a 504 Loan Structured?

The 504 provides borrowers 90% financing at a long-term, below market, fixed rate…
In most cases, the 504 Loan Program can provide up to 90% financing, allowing borrowers to preserve working capital and receive a low, long-term fixed rate.  The Program essentially consists of three components:

  1. 50% of the project’s total cost is provided by a lending institution, usually a bank.
  2. 40% is provided by Growth Corp; and
  3. 10% equity is provided by the applicant small business/borrower.*

*Higher equity requirements exist for start-up or leveraged companies and/or projects involving acquisition, changes of ownership or construction of limited or single purpose real estate

Who Is The Typical 504 Customer?

  • Industrial companies that may have capacity or efficiency limitations or need to install new equipment at their current facility. May include industries such as commercial printers, machine shops, freights & transport, wholesalers, food distributors, and manufacturers.
  • Office buildings and condos that may need a substantial build-out and/or furnishings such as doctors, dentists, chiropractors, physical therapists, accountants, lawyers, architects, graphic designers, etc.
  • Retail companies such as motels, restaurants, car washes, farmer’s markets, boutiques, auto repair shops, gas stations, and convenience stores.
Who is Eligible for the 504?


Most small businesses qualify for the 504 Loan Program.  The business must:

  • Be operating a for-profit business
  • Be organized as a corporation, sole proprietorship, partnership, LLC, etc.
  • Be located in the U.S.
  • Have a tangible net worth of less than $20 million and profit after taxes of less than $6.5 million (including affiliates)
  • Have a successful track record and growth potential
  • Occupy majority of project property (or owner-occupied property)

Projects that qualify must, according to SBA guidelines, promote economic development, which generally means the creation or retention of jobs.

Can Soft Costs Be Rolled into the 504?
Yes. Soft costs (e.g. appraisals, environmental, construction interest, closing costs, etc.) can be financed into the 504 loan, which allows small businesses to preserve working capital.
What Are the Fees and Closing Costs?
 Fee Amt
Growth Corp Processing Fee 1.500%
Loan Servicing Agent Fee 0.250%
Bond Underwriter (20 year bonds) 0.400%
SBA Guarantee Fee 0.000%
Total 2.150%
Closing Attorney Fees $2,500
Fee to Bank, due before Closing 0.5% of First Mortgage Fee
Borrower Closing Costs:
Borrower is responsible for paying for closing items, including, but not limited to, credit reports, title work, recording and search fees.  Growth Corp will charge the borrower 1% of the 504 loan amount, with a minimum of $2,500, to cover these costs upon loan approval and refund any balance at funding.

What Are the Pre-Payment Penalties?
504 loans must be prepaid in full and there is no penalty if pre-payment occurs in the second half of the term (e.g., years 11-20 for a 20 year loan).  During the first half of the loan term, the pre-payment penalty declines over time, beginning at one year’s interest.
What Is the Lender's Role in the 504 Program?
With the 504 Loan Program, lenders will generally process their loan as they would with any other

  • Provide the interim funding until the deed is recorded and 504 bonds are sold
  • The bank’s term of loan (commitment) must be ½ of Growth Corp’s bond, but no less than seven years (equipment) or ten years (real estate).
    o   Usually a 10-year commitment on real estate
    o   Likely 5-year adjustment (but can be floating or fixed)
    o   Amortization is usually 20-25 years
  • Bank gets first lien on all project assets
  • Bank’s loan cannot be cross collateralized with any debts
  • Advance is always based on the project costs
    o   Appraisal usually comes in at or around 90% of land and building cost
  • For changes of ownership, project costs need to be equal or less than the appraised value.
  • Bank is asked to provide copies of its own loan documents
What are the Appraisal requirements?
Recipient Information
The appraisal report must be addressed to and list within the body of the report as an intended user: U.S. Small Business Administration (SBA). A letter of redirection will not be sufficient. SBGC and SBA should be identified as follows:
(1) Small Business Growth Corporation (2) U.S. Small Business Administration
2401 West White Oaks Drive
Springfield, IL 62704-7423
500 W. Madison, Suite 1250
Chicago, IL 60661

The SBA requires a Complete Appraisal for real estate projects $250,000 or greater.   Projects $1,000,000 or greater require a State Certified Appraiser.  At a minimum, both the “cost” and “comparable sales” valuations are to be used to determine the fair market value of the property.  The appraisal must be in compliance with USPAP and include the appraiser’s license, or certificate, and experience.  If appraisal contains an enterprise or going concern value, the appraiser must allocate separate values for each component of the transaction i.e. land, building, equipment, intangibles, etc.  For projects involving substantial renovations or construction, the SBA requires the appraisal to be prepared on an “as-completed” basis. Upon completion of the renovations, the appraiser will be required to attest that the cost and specifications of improvements originally presented have been completed. The report cannot be addressed to the buyer or seller.

Please send the appraisal report to SBGC as soon as it is completed. SBGC and the SBA each need to review and approve the report. The appraisal report must be dated no earlier than one year from the date of the “SBA Authorization”. If the report is older than one year, an update will be required prior to the closing of the SBGC/SBA loan.

SBGC prefers to receive the report via email as an Adobe PDF file. If an electronic version is not available, please overnight a hard copy of the report to SBGC’s Springfield office at 2401 West White Oaks Drive, Springfield, IL 62704-7423.

If you have any questions or concerns, please do not hesitate to contact our Closing Department.

What are the Environmental requirements?
SBA requires an assessment of the environmental risk on all commercial property within one year of SBA loan approval. The minimum that a company can do is an Environmental Questionnaire along with a Record Search Risk Assessment (RSRA) performed by a professional environmental firm.
• If the property is determined to be an elevated risk due to either historic usage of the property, or a high risk industry on a neighboring property that might lead to contamination on the property, a Phase I must be ordered.
• The Phase I must recommend that no further action is needed on the property. If further testing or remediation is recommended, the remediation must be completed as well as Phase II testing.
• The Phase II must recommend that no further action is needed on the property. If further testing or remediation is recommended, the remediation must be completed.

All Phase I and Phase II Environmental Reports will require the SBA Reliance Letter. This reliance letter lists both GROWTH CORP, and the U.S. Small Business Administration (SBA), affirms the environmental professional’s credentials, and requires proof of errors and omissions insurance in the amount of at least $1,000,000.00 per claim. The reliance letter must follow the specific format required by the SBA; no changes to the language are allowed. If the environmental company will not sign the reliance letter, GROWTH CORP/SBA will not be able to use the report(s).  Keep in mind, gas stations and convenience stores are subject to much more rigorous environmental requirements. Please contact a Loan Officer for further details.

Growth Corp is the top CDC in Illinois, the largest 504 Lender in Chicago and a top ten 504 Lender Nationwide, but we're still just a small, focused team working together every day to make the 504 process the best it can be.

We know that when it comes to 504 loans, it's about much more than just getting an approval.  It's the ease-of-mind that comes from knowing Growth Corp's team has their finger on the pulse of the process from application to funding and even beyond into long-term servicing. It's knowing you will be informed every step of the way by the point-person responsible for overseeing the closing of your loan. It's knowing that, given Growth Corp's extremely low turn-over, you'll have the same experienced team members continuing to serve you year-after-year.

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 results in an expedited process for both borrowers and lending partners.  In addition, under the ALP Express Program, Growth Corp has been granted the authority to approve, authorize, close and service SBA 504 loans of $500,000 or less.

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.  But, remember, we're just a small team working together every day to make the 504 Loan process the best it can be.


How Will You Help Your Clients?

877-BEST 504


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