An SBA 504 loan provides funding for the expansion of small businesses, whether through facilities or equipment, with loan terms that are not typically offered by conventional financing. By leveraging 50% traditional financing sources with 40% SBA-guaranteed 504 loans, small businesses receive a balanced package that allows for business growth and job creation.

Primary advantages
to small businesses

  • Up to 90% financing preserves working capital and removes significant barriers to small business expansion
  • Up to a 25-year fully amortizing term allows businesses to match cash outflow with the life of assets which preserves cash for operations
  • Competitive pricing with up to 25-year fixed rates allows businesses to remain competitive, stabilize occupancy costs, and focus on growth

Benefits to the
community

  • Job creation due to healthy, growing small businesses
  • Increased tax revenue due to job creation and expansion of the real estate tax base
  • Enhanced stability of small businesses in the community due to preserved cash flow

LOAN CALCULATOR

Use this simple tool to explore SBA 504 financing options.
The results of this tool are for discussion purposes only.

504 Loan Process

  1. Closing completed with bank
  2. Construction and renovation completed
  3. Business moves into property
  4. 504 loan goes to closing
  5. Bank is paid down on interim loan

FAQs

What is a Certified Development Company?

Certified Development Companies (CDCs) are nonprofit organizations that offer affordable financing to small businesses and are certified and regulated by the Small Business Administration (SBA). As SBA 504 lenders, CDCs facilitate the 504 Loan Program and other SBA programs from beginning to end.

What can the SBA 504 loan be used for?

SBA 504 loans can be used to purchase land, buildings, and equipment, as well as various property improvements and energy upgrades. You can use the funds to buy, construct, or repurpose a building including any renovations necessary.

How much can I borrow with a 504 loan?

The maximum size of the SBA debenture per project is $5 million or $5.5 million for manufacturers or energy-efficient projects. However, there is no limit on the first mortgage or the total project size.

Can I pay off my 504 loan early?

Yes, you can. There is no penalty if you pay off your SBA 504 loan at any time in the second half of the loan’s term. The prepayment penalty in the first half of the term begins at the debenture rate and declines by 10% annually, calculated at six-month intervals.

How long will it take the SBA to review and approve my application?

The SBA needs 5-7 days to review and approve your application. Once the SBA has issued an approval, you will receive an “Authorization for Debenture Guarantee” which outlines the terms of the 504 loan.

Is the loan assumable?

If you are selling your property, a qualified buyer may assume your loan after requisite SBA approval.

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