SBA 504 Loan Program


Financing Available: The lesser of $5,000,000 (5,500,000 in certain situations) or 40% of project costs.

Use of Loan Proceeds: Fixed Assets: land, building, equipment

Term of Loan:
SBA portion: 10 or 20 years based upon economic life of assets.
Private Lender: At least 10 years if SBA amortizes loan over 20 years and at least 7 years if SBA amortizes loan over 10 years.

Rate of Interest: Approximately 1 - 1 1/2% above 5 and 10 year Treasury Note, respectively, on the SBA portion. Private Sector Lender--first mortgage to be made at market rate determined by private lender without SBA restriction.

Downpayment: A minimum of 10%; New starts 15%; (Special purpose buildings -- add an additional 5%)

Typical Structure:

First Mortgage * - 50%
504 Debenture - 40%
Local Injection - 10%
Total 504 Project Cost - 100%

*In any 504 loan, 50% of project costs must be private sector (i.e. Non-Federal guarantee or direct dollars). State dollars count as private sector financing.

How Long Does It Take: Typically 4-6 weeks from receipt of a complete loan application package.

Collateral: Generally a 2nd mortgage/security interest on all fixed assets purchased with loan proceeds.

Corporate Guarantee required on personal loans. Personal Guaranty required on corporate loans.

Eligible Businesses: Operating for profit businesses.

Ineligible Businesses:

Passive income companies
Real estate companies
Financial institutions
Unregulated media firms
Not-for-profit businesses

Job Creation Criteria: $65,000 of SBA 504 funds per one job either created or retained.

Fees: One-time costs amounting to approximately 2%-2.5% of the SBA portion (are capitalized as part of the loan) and .50% of the bank's portion. Closing Costs are responsibility of Borrower.