Current Interest Rates: 25-Year: 4.99% | 20-Year: 4.92% | 10-Year: 5.18% | Refi: 4.96%

empowering economic growth

Frequently Asked Questions

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 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.
What fees will I be charged with a 504 loan?
When your 504 loan is approved, you’ll be charged a commitment fee equal to 1% of the 504 loan amount ($2,500 minimum). This commitment fee, together with the application deposit of $1,000, is used to pay for various closing costs including, but not limited to, credit reports, title insurance, recording and search fees, Growth Corp legal fees and all other out-of-pocket costs. Growth Corp will send a statement detailing the costs paid from these funds together with a refund, if any, of the balance after the loan is funded.

In addition, when your 504 loan is funded, you will incur fees totaling approximately 2.65% of the 504 portion of the financing, and a fixed legal fee of $2,500. These fees are included in the principal amount and financed over the term of the loan (i.e. they are NOT out of pocket expenses). SBA also requires a one-time, participating lender fee equal to 0.5% of the amount of the lender’s permanent loan. This fee may be passed along to the borrower or paid by the lender.

Loan fees are determined by SBA and are needed to cover the cost of administering the 504 Loan Program.

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.
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.
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.
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 roll soft costs into my 504 loan?
Yes. The 504 enables borrowers to include renovations, closing costs and other soft costs (example: legal fees, architectural fees, etc.) along with furniture, fixtures and equipment in the financing package.
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 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 construction or substantial renovations, 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.

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 $15 million and profit after taxes of less than $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.

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.
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.


How Will You Grow Your Business?

877-BEST 504


Central IL Office 217.787.7557   |   Chicago Office 773.880.1455  |  Southern IL Office 618.932.3786

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