SBA 504

Apply Online: SBA 504.pdf

Borrower Benefits:

• Low down payment-as little as 10%
• Long term repayment-10 or 20 years
• Below market, fixed interest rates
• Loan fees may be financed
• Loan is assumable

Terms:

• Business must be for-profit
• Net worth less than $7 million
• 2 year average net profit after taxes of less than $2.5 million
• Business applicant must be primary user of facility
• 51% for existing facilities
• 67% for new construction
• There must be a creation or retention of jobs (one job per $35,000 in loan funds)
• Loan is secured with a lien on project assets
• Personal guarantees of principals owning more than 20% are required
• Declining prepayment penalty during the first half of the term

Use of Proceeds:

• Land acquisitions and improvements
• Construction of new facility
• Purchase/renovation of existing building
• Purchase of equipment with a useful life of at least 10 years
• Payment of interest/fees on interim financing
• Payment of soft cost related to project (i.e. Professional fees)

Loan Structure:

• Bank Loan 50%
• SBA Loan 40%
• Borrower 10%*

*15-20% if project is start-up or special purpose realty

Difference from 7A:

• Lower rates, because they are secured by fixed assets
• Lower down payment-as little as 10%
• Not as flexible in terms of loan proceeds

Talk to your lender today about the benefits of the 504 program for your financing needs