SBA 504 Loan Program

ADVANTAGES

The 504 Loan Program is SBA’s economic development instrument supporting small business growth and helping communities through business expansion and job creation. The 504 loan provides long-term, fixed rate, subordinate mortgage financing for acquisition and/or renovation of capital assets including land, building and equipment. Virtually all types of for-profit businesses are eligible for this program.

Borrower Characteristics

Businesses that receive 504 loan financing are:

  • Small - net worth under $15 million, net profit after taxes $5 million, or meet other SBA size requirements
  • Organized as for-profit
  • All types of businesses eligible - retail, service, wholesale, manufacturing, etc
  • Project must create one (1) job for every $65,000 of SBA funding.  Jobs are to be created within two years of receiving loan proceeds.  Meeting a public policy goal, such as minority-owned, rural development, etc., can be an exception for creating jobs.
  • Fees are required for use of services of others due to listed SBA personnel.  Funding fees total almost 3% (three percent) of the SBA loan amount.  There are also ongoing servicing fees during the life of the loan.
  • Prepayment premiums are due on SBA 504 loans during the first half of the loan terms, i.e.: in the first 10 years of a 20 year loan.  The premium is required to ensure that debenture investors are guaranteed the stated yeild on their investments.

Where To Call:

Wilmington Business Development
SBA Certified Development Company
910-763-8414
910-763-0106 (fax)
contact@wilmbusdev.com

Contact:

Susie Parker, Office Manager
sparker@wilmbusdev.com

For more information on all loan programs offered by the Small Business Administration, you may find them on the Internet at www.sba.gov or you can contact the Charlotte District Office in North Carolina at 800-827-5722.

Wilmington Business Development
(910) 763-8414

Current Rate as of March 2013 4.3%

(rates subject to change) SBA 504 loans are distinguished from other SBA programs in these ways:

  • Lower down payment, allows a business to conserve valuable operating capital by injecting as little as 10% of the total project costs for existing businesses
  • Fixed interest rate for life of loan
  • Project costs which can be financed include land, building (or construction), renovations, machinery and equipment, soft costs (appraisal, environmental, architect, etc.)
  • Collateral is typically assets financed
    Longer terms; real estate loans are 20* years; machinery & equipment loans are 10 years
  • 504 program encourages lenders to make loans in first position on reasonable terms, helps them retain growing customers, and provides CRA credit