How does it work?
What types of projects are eligible for 504 financing?
- Purchase of existing land and building
- Purchase of existing land and building, and improvement / renovation of that building
- Purchase of land and construction of a new building
- Renovation of an existing building
- Expansion of an existing building
- Purchase, installation and relocation of new and used large equipment
| TYPICAL 504 STRUCTURES | |||
|---|---|---|---|
| Standard Financing Structure | New Business or Limited or Special Purpose Property | New Business and Limited or Special Purpose Property | |
| Bank | 50% | 50% | 50% |
| 504 | 40% | 35% | 30% |
| Borrower | 10% | 15% | 20% |
What are considered “special / limited purpose” facilities?
- Car washes
- Marinas
- Farms, including livestock and dairy
- Gas stations
- Hotels, motels and lodging facilities
- Hospitals, assisted living facilities and nursing homes
What is considered a “new business”?
A business that has been in operation for 2 years or less at the time of loan application. A business may also be considered “new” if there is a change of ownership that results in new or unproven ownership or management.
What are the occupancy requirements?
- For an existing building, the business must occupy at least 51% of the total indoor square footage
- For a new construction project, the business must occupy at least 60% of the total indoor square footage
- NOTE: Residential space DOES NOT count toward owner occupied space, even if the business owner lives there
Who is eligible?
| ELIGIBLE LOAN AMOUNTS | |||
|---|---|---|---|
| 504 LOAN | BANK LOAN | TOTAL PROJECT COST | |
| Minimum 504 Loan | $60,000 | $75,000 | $150,000 |
| Maximum SBA exposure per borrower | $5,000,000 | Unlimited | Unlimited |
| Maximum 504 Manufacture or “Green” per project | $5,500,000 | Unlimited | Unlimited |
What types of businesses are eligible?
- Tangible net worth (retained earnings) must not exceed $20,000,000
- After tax net income must not exceed $6,500,000
What is eligible?
What costs are eligible for financing?
- Cost of land and building
- Furniture & Fixtures, up to 10% of total project cost
- Soft construction costs including landscaping, telephone and security systems, parking lots, demolition costs, etc.
- Professional fees including appraisal, environmental, title work, construction draws, engineering costs, architectural costs, surveying, utility fees, etc.
What types of projects and costs are NOT eligible for 504 financing?
- Franchise fees
- Working capital
- Start-up costs
- Inventory
- Improvements to space being leased to a tenant
- Improvements to space being leased to the business (business is a tenant)
- Purchase of stock, goodwill, company name, customer lists, blue sky
- Non-profit entities
- Investment property
- Residential property
- Real estate commissions
- Bank fees
- Vehicles- anything with a VIN (trucks, cars, semis, rolling stock)
- Boats and airplanes
Fees & Terms
What are the available debenture terms?
- 10-, 20- and 25- year terms for real estate and equipment
- Terms are subject to the remaining useful life of the loan collateral as determined by appraisal or manufacturer of equipment
|
| |||||||||||||||||||||
| Out of Pocket Fees | |
|---|---|
| Application Deposit (RDC) | $1,000 |
| Bank Participation Fee (SBA) | 0.50% |
504 Loan Timeline
Get Started Today
Contact us to get more info to see if your business is right for a 504 loan. Lets get the ball rolling, one of our loan officers will be in touch with you shortly:
