504 LOANS FINANCE
empowering economic growth
504 loan program
- Low down payment (10% in most cases)
- Low, fixed interest rate on 504
- Long loan term
- Includes soft costs such as furniture, fixtures and fees
- Payment stability
- Preserves working capital
- Protection from balloon payments
- Can include leasehold improvements
- Up to $5 million for SBA portion of loan, no limit on overall project size
- Keep your lender or allow us to match you with one of our lending partners
- The 504 Loan Program can be used multiple times
Interest Rate History
504 vs 7a
HOW THE 504 HELPS
Long-term fixed rates
No future balloons
Low down payments
Real Estate Loans
Lines of Credit
Consolidate Multiple Loans
Obtain Working Capital
HOW THE 504 HELPS
Eliminates balloon payments
Existing equity = down payment
Can provide a cash out option
New Builds w/ Sustainable Energy
Energy Efficient Upgrades
Energy Generating Equipment
Reduction of energy consumption by 10%
Increased use of sustainable design
HOW THE 504 HELPS
Removes $ limit on 504 portion
Borrowers can take multiple loans
Slashes the bank’s risk to 50%
Up to $5.5 million per project
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.
Can 504 Loans include soft costs?
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 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.
How are the 504 rates determined?
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.
Who is eligible for 504 loans?
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 borrower?
- 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.
If you need a small business loan...
You’ve come to the right place.
The 504 Loan Program is one of the best financing solutions on the market. It provides small business owners with financing for the purchase, construction and renovation of commercial real estate and/or the purchase of long-term machinery and equipment. The best part? Borrowers typically receive financing for up to 90% of the project cost at a low fixed interest rate, which is then locked in for twenty years (10 for equipment). Plus, with the re-launch of the Refinance Program, small business owners can use the long-term, fixed rate 504 Loan Program to refinance existing commercial mortgages.
SBA 504 LOANS
How Will You Grow Your Business?