 What is a 504 Loan? |
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| The 504 Loan Program is utilized to finance existing, expanding and start-up businesses in conjunction with another lender (usually a bank). Iowa Business Growth Company (IBGC) provides permanent take-out financing when the project is completed and the loan is closed in accordance with loan covenants and restrictions. |
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The lesser of $1,500,000 ($2,000,000 in certain situations) or 40% of project costs.
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Fixed assets including Land, Building, Equipment.
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Real estate loans are 20-year term; machinery and equipment loans are 10 or 20-year term.
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Fixed interest rate usually below market. The rate on the 504 loan is set when the loan is "funded". This typically occurs 60 to 90 days after the completion of the project.
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Minimum Down Payment
Existing business 10%
Start-up business or single purpose building 15%
Start-up business and single purpose building 20%
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Businesses can obtain up to 90% financing. However, start-up businesses and projects with single purpose buildings will be required to provide a larger down payment. |
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Existing
Business |
Start-up
Business |
Start-up Business and
Single-Purpose |
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| First Mortgage Lender |
50% |
50% |
50% |
| 504 Loan |
40% |
35% |
30% |
| Borrower Down Payment |
10% |
15% |
20% |
| Total Financing |
100% |
100% |
100% |
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Collateral is typically a second lien on assets financed (land, building, equipment);
allows other assets to be free of liens and available to secure other needed financing.
Personal or Corporate Guarantees
Key Man Life Insurance
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Loan fees and closing costs are eligible project costs and can be financed.
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What is a 504 Loan?
Why a 504 Loan?
