To be eligible for a 504 Loan, your business must:
- Operate as a for-profit company in the United States or its possessions.
- Have a tangible net worth of less than $15 million.
- Have an average net income of less than $5 million after federal income taxes for the two years preceding your application.
What can I use a 504 loan for?
What can an SBA 504 loan be used for? A 504 loan can be used to purchase fixed assets that “promote business growth and job creation.” This could include a new building, equipment or machinery. You can also use a 504 loan to build or upgrade facilities, including utilities, streets or parking lots.
How much does the SBA guarantee on a 504 loan?
A Certified Development Company (CDC) provides up to 40% of the financing through a 504 debenture (guaranteed 100% by SBA); A third party lender provides 50% or more of the financing; The borrower contributes at least 10% of the financing.
Do SBA loans check credit?
All SBA 7(a) Small Loans (up to and including $350,000) are screened for a credit score upon entering the application into E-Tran. If the applicant receives an acceptable credit score, the application may be submitted via E-Tran.
Are SBA loans federally guaranteed loans?
An SBA loan is a type of government small-business loan that’s issued by private lenders but backed by the federal government. The SBA has several loan programs, including 7(a) loans, 504 loans and microloans (more on these below).
What can I do with a SBA 504 loan?
You can learn more on the SBA website. An SBA 504 loan not only helps small business owners buy commercial real estate and long-term equipment, but it also encourages economic development and promotes job creation.
What’s the maximum amount you can get for a 504 loan?
504 loans. The SBA authorizes CDCs to provide financing to small businesses with the help of third-party lenders (typically banks). Maximum . SBA . loan amount: Loans are generally capped at $5 million. Certain eligible energy-efficient or manufacturing projects may qualify for more than one 504 loan up to $5.5 million each. Interest rate:
What do you need to know about the 504 program?
The 504 program is an economic development program aimed at promoting growth and job creation, thus there may be a job creation requirement that is dependent on the amount of funds received. Under the umbrella of the 7(a) loan program is the SBAExpress loan.
Is there a prepayment penalty on a SBA 504?
SBA 504 loans are amortized (meaning scheduled debt repayments are made in regular installments) over 20 years, with no balloon payment. So you don’t need to worry about a massive final payment. Unfortunately, there’s a prepayment penalty on the 504 loan for the first half of the loan term.
