SBA 504 Loan Program
(Commercial Real Estate & Capital Equipment)
To provide long-term below market rate financing to businesses that will retain jobs and create new employment opportunities.
- The Purchase of Existing Buildings
- Land Acquisition and Ground Up Construction (includes soft cost development fees)
- Expansion of an Existing Building
- Financing Building Improvements
- Refinancing of Buildings and Equipment
- The Purchase of Equipment
- Loan Amount
- No Project Maximum. SBA portion $25,000 to $5,000,000 ($5.5 million for energy savings and small manufacturers)
- Participation Levels (General)
- Private lender: 50% of total project cost
- SBAC: Up to 40% of total project cost ($1.5/$4 million maximum)
- Small Business Concern: 10% of the total project cost (maximum of 20% as regulated by the SBAC)
- Private lender: Senior lien on project property as determined by private lender
- SBAC: Subordinate lien on project property and/or pledge of personal assets, personal guaranty of owner(s) as determined by the SBAC.
- Private lender: 10 or 25 years as determined by private lender
- SBAC: 10 or 20 years, as determined by the SBAC
- Interest Rate
- Private lender: Variable or fixed, as determined by the private lender.
- SBAC: Interest rates on 504 loans are generally at an increment above the 10 year U.S. Treasury issues. All SBA 504 rates are fixed for the entire term.
- Fees to Borrower
- SBA/SBAC: Approximately 2.2% of the net SBA debenture amount. A $1,000 packaging fee is collected prior to processing the 504 request.
- Minimum Equity Investment
- Minimum 10% – 20% equity in the project is required as regulated by the SBAC. Most applicants qualify for 10% equity requirement. Start up businesses require an additional 5%, and single purpose real estate projects require and additional 5% for a maximum down payment requirement of 20%.
ECONOMIC DEVELOPMENT CRITERIA
Standard SBAC criteria mandate one new job or job retained per $65,000 of total 504 loan amount (i.e., $650,000 = 10 jobs required). Job creation criteria can be waived or modified in some cases, such as if the project involves exporting, is located in a revitalization district, rural area, is woman, veteran or minority owned, or meets any other national priority. Small manufacturing is calculated at $100,000 per job.
All rates and terms subject to change without notice.