504 Loan Program In-Depth


The SBA 504 Loan Program makes business growth and expansion easy.  Use the links below to learn more information about the 504 Loan.

What can be financed?
How much will it cost?
How much can I finance?


What can be financed?

Eligible Uses of Funds

  • • Purchase of land and existing buildings
  • • Construction of new facilities, including infrastructure costs, utilities, parking lots landscaping and professional fees
  • • Modernization, renovation or conversion of existing facilities
  • • Expansion of existing facilities
  • • Purchase of machinery and equipment with a useful life of 10 years of more

Ineligible uses of Funds

  • • Working capital
  • • Inventory
  • • Consolidating or repaying debt
  • • Purchase of goodwill
  • • Refinancing current debt
  • • Franchise fees
  • • Vehicles or airplanes

How much will it cost?

Interest rate

  • • The interest rate will be fixed for the entire term of the loan
  • • Interest rates are priced at a margin above the current market rate for five-year and 10-year U.S. Treasury issues

Terms

  • • Maturities of 10 and 20 years are available
  • • Loan is fully amortized over the chosen 10 or 20 year term
  • • Lines of credit are not eligible

Fees

  • • Fees total approximately three (3) percent of the debenture and will be financed into the SBA loan

How much can I finance?

Minimum Debenture

  • • The minimum debenture for the SBA portion of the loan is $60,000.  This equates into a total project amount of about $150,000


Maximum Debenture

  • • $5 Million for most 504 loans
  • • $5.5 Million for small manufacturers


Borrower Injection

The borrower may provide the 10-20% injection in the following ways:

  • • Personal or business cash
  • • Equity in real estate (special conditions apply)
  • • Personal or business loan

Amount Financed 

Typically, the Partner Bank finances 50% of the total project amount, the SBA finances 40% and the small business injects 10% cash/equity. If the building is deemed Special Purpose, the borrower would be required to inject an additional 5% cash/equity, for a total injection of 15%. If the business is considered a New Business, the borrower would be required to inject an additional 5% cash or equity, for a total injection of 15% If the business is a new business and the building is  special purpose, the borrower would be required to inject an additional 10% cash or equity, for a total injection of 20%.

What We Do

The Regional Development Company (RDC) is a Certified Development Company, licensed by the U.S. Small Business Administration.  We serve northern Indiana businesses seeking funding to help grow their company.

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Latest News

November 2011 - Regional Development Company Presents Awards, Welcomes New Board Members.

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Contact Us

Have questions about your options for expansion?  We are here to help.

Contact Us

1757 Thornapple Circle
Valparaiso, Indiana 46385 (map)

phone: 219.476.0504
fax: 219.476.4141