SBA 504 Loan Program
The SBA 504 is a direct loan program of the U.S. Small Business Administration, which is available through Areawide Development Corporation, a regional, private, non‐profit economic development corporation. Areawide Development Corporation works with other economic development organizations to enable companies to access the 504 program.
Advantages to Business Owners
- Low down payment allows business to keep more working capital
- Long term of loan keeps monthly payments affordable
- Assumable loans
Advantages to Lenders
- Provides customer with up to 90% financing
- Creates 50% loan‐to‐value through first lien on property
- Independent credit decisions made with no SBA paperwork
- CRA (Community Reinvestment Act) credit available for projects
Eligible Applicants
- For profit
- Less than 500 employees
- Net worth not to exceed $15 million
- 2 year average net income after taxes not to exceed $5 million
Eligible Uses
- Building acquisition, expansion, construction • Land and site improvements
- Machinery and equipment • Leasehold improvements
Financing Structure
- SBA 504 40%
- Equity 10%
- Bank 50%
Loan Amounts
- 40% of project cost (start up and special use facility 35%)
- Maximum SBA loan of $5,000,000 and $5,500,000 for manufacturing
- Minimum total project cost $200,000
Forms
Term
- 20 or 25 years for real estate
- 10 years for machinery and equipment
Collateral Required
- Second lien on assets being financed
- Personal guarantees for all 20% owners
- Other collateral when applicable
Job Creation
- One new or retained job for every $65,000 borrowed from SBA 504
- Two years to create jobs
Service Benefits
- Areawide Development serves as customer interface with Small Business Administration
- Areawide Development reduces paperwork through experienced loan processing
- Areawide Development’s experienced lending team provides creative solutions and responsive turnaround
Examples of Projects
- Manufacturing
- Convenience Stores
- Professional Offices
- Restaurants
- Fitness Centers
- Medical Practice
- Vetrinary Hospitals
- Franchises
- Auto Dealerships
- Motels
December 2022 Funding Rates |
|||
| 10 Year | 20 Year | 25 Year | |
| Debenture Rate | 4.70% | 4.56% | 4.71% |
| Note Rate | 4.86652% | 4.62866% | 4.76114% |