What Is A 504 Loan? National Association of Development Companies (NADCO), loan servicing software.#Loan #servicing #software


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OWN YOUR BUSINESS, OWN YOUR LIFE

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VALUE

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LOW DOWN PAYMENT

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GOVERNMENT BACKED

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LOW FEES

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LONG TERM FINANCING

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COMPETITIVE INTEREST RATES

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FIXED RATE

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FLEXIBILITY

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ELIGIBILITY

For a more in-depth Top 10 List that compares the SBA 504 loan to the 7(a), please view For Lenders: Top Ten Reasons to Use the 504.

Loan Structure

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Am I Eligible?

Eligible Uses

  • Acquisition of vacant land
  • Building construction
  • Acquisition of existing buildings
  • Major renovations and/or additions to exisiting building
  • Marine facility acquisition, including fishing vessels and commercial boats
  • Purchases of capital equipment, including heavy machinery
  • Associated costs such as title and insurance, legal fees, appraisals, environmental reports, architects fees, surveys, equipment installation, points on bridge loans, furniture and fixtures, etc.

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Above Photo – Jenny’s Floral in Custer, SD. SBA 504 loan provided by Black Hills Community Econ. Development, Inc., Rapid City, SD

Note Loan funds may not be used for working capital, mortgage broker fees, bridge loans during the construction period, business inventory, rolling stock (i.e. trucks) or refinancing of existing debt of the business.

Eligible Companies

Companies consistent with the following criteria are eligible:

  • Franchise businesses are eligible and, if listed in the franchise industry, may qualify for expedited loan approval
  • Legal entity – corporation, partnership, sole proprietor, limited liability company
  • Located in the United States
  • Net worth under $15 million and net profits under $5 million
  • Participation by another lender who finances up to 50 percent of project costs
  • Economic development goals must be achieved through the project financing
  • Owner-user of the project being financed must occupy at least 51 percent of the property for an existing building or 60 percent of a newly constructed building. Two or more unrelated small businesses can receive an SBA 504 loan if they combine to meet occupancy requirements.

Companies consistent with the following criteria are NOT eligible:

  • A not-for-profit (exception for sheltered workshops)
  • Engaged in lending; a passive holder of real estate and/or personal property; a life insurance company – however an insurance agency is eligible)
  • Located in a foreign country or owned by aliens who do not have legal permanent resident status
  • Has restriction on patronage
  • Is a government-owned entity (exception for Native American tribes)
  • Engaged in promoting religion
  • Consumer and marketing cooperatives (producer cooperatives are eligible)
  • Engaged in loan packaging
  • Owned by persons of poor character
  • Equity interest by lender, CDC or associates in applicant concern
  • Provides prurient sexual material
  • Has previously defaulted on a federal loan
  • Engaged in political or lobbying activities
  • Speculative businesses

Eligible Projects

Most growing businesses are adding staff as they expand and look for larger facilities.

There is no limit to the total project cost, however, a CDC can lend you up to 40 percent of the project cost with a dollar cap of $5,000,000 depending on the type of project.

CDCs can exceed $5,000,000 and go as high as $5,500,000 of 504 financing for eligible manufacturing projects and for projects that incorporate energy saving technologies for sustainable design.

Manufacturing & Energy Efficient Projects

  • Eligible manufacturing projects
  • Projects Incorporating energy saving technologies for sustainable design
  • Projects that generate renewable energy like solar, wind or geothermal
  • Small businesses wishing to purchase, construct or retro-fit facilities incorporating energy saving technologies that result in a 10 percent decrease in energy consumption.

Want More Information?

For more information, view a PDF presentation on the SBA 504 loan by right clicking the following image and downloading the file:

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