The Right Loan for Business Owners
The US Small Business Administration (SBA) is a government agency with the main purpose of helping small businesses get the funds they need for real estate or equipment. The SBA 504 Loan program is your best option for this type of financing.
What are SBA 504 loans?
The U.S. Small Business Administration 504 Certified Development Company Loan program conserves our working capital by requiring only a 10 percent borrower contribution.* If you do not qualify for conventional financing, the SBA-backed 504 loan may be right for you. Certified Development Company (CDC) are nonprofit corporations that promote economic development within their communities through 504 loans. The SBA authorizes CDCs to provide financing to small businesses with the help of third-party lenders (typically banks)
This loan program provides financing for businesses to purchase real estate, major fixed assets, and equipment, or to make improvements like landscaping. This program can also provide funding for renovation.
504 Loan Program Details
$5K - $5 Million
3 Months - 2 Years
9.99% - 24.99%
As Fast As Same Day
How can I use an SBA 504 loan?
A Small Business 504 can be used for many things for example:
- Purchase existing building
- Land acquisition and ground-up construction (can include soft cost development fees)
- Expansion of existing building
- Finance building improvements
- Purchase equipment
- Job creation
- Purchase or renovate capital assets (land, buildings)
- Refinancing permitted
- New Construction
- Leasehold Improvements
SBA 504 Loan Program Eligibility Requirements
Below you will find some of the Eligibility requirements for small businesses:
- A good credit score – preferably above 660.
- A history free from recent bankruptcies, foreclosures, or tax liens.
- Having been in business for at least two years.
- Be a nonprofit corporation in good standing
- Have a board of directors with at least nine voting directors (additional board of directors requirements are listed in 13 CFR 120.823)
- Have full-time professional management and a full-time professional staff
- Meet a minimum level of lending activity
Who is eligible for SBA 504 Loan?
While the bulk of small businesses are eligible for financial assistance from the SBA, a small amount aren’t. 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 are the SBA 504 Loan Interest Rates and Terms?
Interest rates are negotiated between the borrower and the lender but are subject to SBA maximums, which are pegged to the prime rate, the LIBOR rate, or an optional peg rate. Interest rates may be fixed or variable according to the Small business administration and its 504 loan program guidelines.
- Pegged to an increment above the current market rate for 5-year and 10-year U.S. Treasury issuesÂ
- Totals approximately 3 % of the debt, a rate may be financed with the loan
What are the Fees on SBA 504 loans?
Interest rates on 504 Loans are directly connected with the current market rate for 5-year and 10-year the U.S. Treasury issues. Loan maturities can vary and terms of 10 and 20 years are available. Fees may also be financed with the loan.
What are the Pros and Cons of SBA 504 loans?
SBA 504 loan PROS include:
- Low down payment (10% in most cases)
- Fixed low interest rate on 504
- Long loan term
- Includes moving and installation costs
- Payment stability
- No future balloon payments
- Up to $5 million for SBA portion of the loan, no limit on overall project size
- Keep your lender or allow us to match you with one of our lending partners
SBA 504 loan CONS include:
- The time frame from application to approval takes some times approximately 60-75 days to close. so if you are looking for a fast loan this may not be the best option for your business.
- a 504 loan cannot be used for Working capital or inventory, Consolidating, repaying, or refinancing debt, and investment in rental real estate
- Loans cannot be made to businesses engaged in nonprofit, passive, or speculative activities
Is an SBA 504 Loan a Good Choice?
The benefits of an SBA 504 Loan to small businesses
- Low down payment usually only requires 10% of the loan value down.
- Low, fixed interest rate on 504
- Long loan term
- Includes moving and installation costs
- Payment stability
- No future balloon payments
- Up to $5 million for SBA portion of loan, no limit on overall project size
- Keep your lender or allow us to match you with one of our lending partners
If approved how does it take to get SBA 504 loans?
The time to turn around an SBA 504 loan is typically between 60-75 days there may be special cases where businesses may experience longer or shorter times.
What equipment can be purchased with an SBA 504 loan?
Now, below are just a few examples of equipment you might buy within industries that do qualify for an SBA loan:
- Purchase of One or More Existing Building
- Construction of One or More New Building
- Land Purchase or site improvements
- Commercial Printers
- Food Processing Machinery
- Highly Calibrated Machines
- Equipment that generates renewable energy
How can I apply for an SBA 504 loan?
We make it easy, simply apply online and we’ll be in touch to go over your options.
Safe & Secure
Documents You'll Need to Apply
- Completed Application
- Driver’s License
- Voided Business Check
- Business Bank Statements (Last 6 Months)
- Credit Application
- Balance sheets
- Profit & Loss Statements
- 2 Years Business Tax Returns
- 2 Years Personal Tax Returns
- Account Receivables Report (if securing AR)
- Inventory List (if securing inventory)
- Equipment List (if securing equipment)
- Collateral Information
*See above for SBA loan requirements.Â
SBA 504 Loans
Take advantage of Upwise Capital’s easily accessible SBA 504/CDC loan program right now. Our team of funding experts will put together a list of products and lending solutions. Help is just a few clicks away. Simply fill out our Funding Application Form right now or call us on the phone at 775-5-UPWISE (879473) to get approved for an SBA 504 within 24 hours.