SBA 504 Loan Program
In business, you need more than a vision to reach your potential. You need money to make things happen. The SBA 504 loan program, backed by the Small Business Administration, might provide the financial support you need to turn your dreams for your business into reality.
Understanding SBA 504 Loans
SBA 504 loans are intended for owner-occupied commercial properties and other fixed assets. If purchasing a property, over 51% of it must be occupied by the owner.
The SBA 504 loans are structured in the following way:
- Up to 50% of the funding must come from a lending institution.
- Up to 40% of the funding must be supplied by a certified development company.
- The borrower is responsible for the remaining 10% as a down payment.
SBA 504 loans can be used to:
- Purchase land or existing structures
- Initiate improvements to a property’s utilities, parking lots, or landscaping
- Build or rehabilitate a structure
- Buy capital equipment
SBA 504 loans cannot be used to fund operating capital or to repay other debts.
What Types of Businesses Qualify for an SBA 504 Loan?
The SBA offers funding to a wide range of businesses. Here are the ones that might qualify:
- Assisted living facilities
- Automotive dealerships, auto repair businesses, car washes, and gas stations
- Grocery and convenience stores
- Fitness facilities
- Health care and dental facilities
- Insurance offices
- Manufacturing operations
- Schools and child care services
- Veterinary offices
This is not an exhaustive list of qualifying businesses. Contact us to see if an SBA 504 loan might help you reach your goals.
SBA 504 Loan Eligibility Requirements
To qualify for an SBA 504 loan, the borrower must:
- Have a minimum credit score of 680
- Need to finance at least $30,000 and prove the need for this support
- Not use funds from other sources to fund their property purchase
- Have been in business for at least two years
- Demonstrate at least $50,000 in revenue over the past year
- Pay the loan in an agreed-upon time frame that considers the company’s cash flow
- Produce a personal statement that shows the borrower’s good character and commitment to debt repayment
For successful loan approval, the business must:
- Operate for a profit within the U.S. or U.S. territories
- Not profit from rental real estate
- Have a net worth of less than $15 million, and the after-tax net income must be less than $5 million for the past two years
- Have a sensible, comprehensive business plan in place
Contact Us Today!
If you are a small business owner seeking funding to take your business plan to the next level, an SBA 504 plan might help you get there! Contact us today to determine if you qualify for an SBA 504 loan.