As a manufacturing business, your success depends on efficiency, space, and state-of-the-art equipment. That’s where the SBA 504 Loan Program shines. It’s a strategic financing solution designed to help manufacturers grow without crushing cash flow.
SBA 504 for Manufacturing
More and more manufacturing businesses are turning to the SBA 504 Loan Program. And with good reason. For years, small businesses looking to grow and expand their operations have found a powerful and supportive ally in the Small Business Administration (SBA). Its SBA 504 loan program is designed to meet the needs of small businesses by providing access to attractively priced financing options not available through conventional sources. But now scores of larger, manufacturing companies are discovering why SBA 504 Loans are an optimal financing solution. Check out the ways the 504 maximizes stability, capacity, and cash flow for manufacturers.
Fixed, Below-Market Interest Rates
With long-term, fixed-rate financing (often 10, 20, or 25 years), manufacturers can lock in low-cost capital—critical when investing in big-ticket assets like facilities or specialized machinery.
Expand or Upgrade Facilities
Whether you’re outgrowing your current plant or need a more energy-efficient space, the 504 loan allows manufacturing companies to purchase, build, or renovate commercial real estate—with just 10–15% down.
Invest in Equipment
Need CNC machines, robotics, or conveyor systems? 504 loans also cover major equipment purchases with a lifespan of 10+ years—empowering you to automate and scale.
Preserve Working Capital
With lower down payments compared to conventional loans, you can retain cash for operations, payroll, and R&D—critical for keeping production lines moving and staying competitive.
Job Creation Incentives
504 loans are designed for job creation. Manufacturers often qualify more easily because they naturally contribute to employment and economic development.
Provides Manufacturing Businesses with Access to Property Ownership
The SBA 504 loan program is an economic development initiative administered by SBA. This public-private partnership provides a long-term fixed rate lending solution for small business owners to buy, expand or refinance major fixed assets – such as land, commercial real estate, equipment, and machinery. The program requires three key players – a small business borrower, a Certified Development Company (CDC), like Growth Corp, and a third party lender (i.e. bank or credit union).
For a manufacturer looking to purchase their facility, the typical loan structure would involve the third party lender providing 50% of the financing, the CDC providing up to 40% of the financing backed by a 100% SBA-guaranteed debenture, and the applicant putting down 10% as equity. These borrower-friendly terms provide manufacturers a pathway to ownership and growth:
- Low down payment – up to 90% financing for established businesses
- Below-market interest rates – lower and more affordable monthly mortgage payments, freeing up capital to reinvest in the business (check out the interest rate history for 504 Loans)
- Long-term rates 10, 20, or 25 year fixed – no future balloon payments to worry about
- An additional benefit for manufacturers is that the maximum SBA loan amount per project (debenture) is $5.5 million as opposed to $5 million for all other industries.
Curious what a monthly payment might look like? Take advantage of Growth Corp’s payment calculator to estimate your monthly payment.
Provides Manufacturing Businesses with Flexibility to Expand and Customize
Building ownership is just the start of the SBA 504 loan. The structure of the program allows borrowers to not only purchase commercial real estate, but to make critical updates that allow manufacturers to meet new demand. 504 loans funds can be used for:
- Expansion, construction, and renovation of a new or existing facility – personalized for optimum efficiency, safety, and flexibility to grow
- Heavy fixed equipment to expand capacity and streamline operations
- Upgrades and modernizations to reduce energy use or offset that consumption through the use of renewable energy
Provides Manufacturing Businesses with Access to Existing Equity
For manufacturer business owners who already purchased their facility with a conventional loan (mortgage must be at least two years old), the SBA 504 Refinance Loan is a great option to save and improve cash flow. In addition to the lower monthly mortgage payments, fixed 20- or 25-year low interest rate, and payment predictability of the 504 Loan Program, Refinance loans allow you to take cash out for eligible expenses. The cash out piece ranges up to 20% of the appraised value of the property. Eligible expenses for cash out funds include:
- Salaries (non-owners)
- Rent
- Utilities
- Inventory
- Business line of credit and business credit card debts
Manufacturers See Significant Benefits from SBA 504 Loans
Manufacturing firms actually stand to gain quite a bit with 504 loans.
- Long loan terms of 20- or 25-years for real estate and 10 years for equipment.
- Low, fixed interest rates for the life of the 504 loan
- Manufacturers may be eligible for up to $5.5 million per project on the SBA second mortgage portion of the loan. There is no limit overall on project size.
- There is no limit on the number of SBA 504 loan projects allowed to manufacturers so long as the aggregate amount is below $16.5 million. So, a growing, small manufacturer could use the program to purchase a new facility, finance various pieces of new equipment and open an additional facility. Funds for small manufacturing projects are not limited by SBA’s lending limits of $5 million per borrower.
- SBA financing is total project cost financing. This means it includes land, construction/renovations, equipment, furniture/fixtures, soft costs and closing costs. Financing total project costs is a clear advantage as it allows borrowers to preserve capital and use it to grow their business in other ways.
Position Your Business for Long-Term Growth with SBA 504
The SBA 504 loan isn’t just financing—it’s a growth strategy tailor-made for manufacturers. Lower costs. More space. Better equipment. Stronger future. Let’s make your next big move happen. Consider the SBA 504 for manufacturing and reach out to an experienced member of our lending team today.
About Growth Corp
Small Business Growth Corporation (Growth Corp) is a nonprofit, mission-based lender dedicated exclusively to connecting small businesses with quality expansion capital through administration of the SBA 504 Loan Program. With a commitment to economic development, job creation and the small business sector, Growth Corp is ranked a Top 10 National CDC for SBA 504 loan volume and is Illinois’ largest 504 loan provider.