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Eligibility

Eligibility Guidelines:
  • Organized as a for-profit business

  • Legal entity - corporation, partnership, sole proprietor, or limited liability company

  • Any type of legitimate business - manufacturing, wholesale, service, professional service or retail

  • Located in or planning to locate in any area of the United States

  • Small business - either: net worth under $15 million and net profits after taxes under $5 million or meet SBA's other size standards (by sales or number of employees depending on NAICS code)

  • Planning to use the loan proceeds for capital investment - land, building, renovation, construction, machinery and associated soft costs. (The SBA 504 loan program is not a working capital program.) Call us for more details on what uses of loan proceeds can be included. In some cases, debt refinancing is eligible

  • Another lender must be willing to participate in the financing. The SBA 504 loan finances up to 40% of the total project cost and the other lender finances 50%. The business or its owner typically puts in 10%

  •  Economic development goals must be achieved through the project being financed

  • Owner must be user of the project being financed (51% occupancy if existing building; 60% occupancy if new construction)

  • Two or more unrelated small businesses may receive a 504 loan to buy or construct a building as long as they, together, will occupy at least 51% of an existing building or 60% of new construction

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Companies that are not eligible for SBA 504 loans are:
  • Non-profit businesses 

  • Businesses engaged in lending (such as banks, finance companies)

  • Passive holders of real estate and/or personal property

  • Life insurance companies (however an insurance agency is eligible)

  • Businesses located in a foreign country or owned by undocumented aliens

  • Businesses selling through a pyramid plan

  • Illegal businesses

  • Businesses which restrict patronage

  • Government owned entities (excluding Native American Tribes)

  • Businesses engaged in promoting religion

  • Businesses engaged in loan packaging

  • Businesses owned by persons of poor character

  • Equity interest by CDC or associates in applicant concern

  • Businesses providing prurient sexual material

  • Businesses that have previously defaulted on a Federal loan

  • Businesses engaged in political or lobbying activities

  • Speculative businesses

 
What are some of the Permitted Uses of 504 Loan Proceeds?
  • Acquisition of land and building

  • Acquisition of vacant land for construction of building

  • Construction of building

  • Renovation of building; addition to building

  • Acquisition of heavy duty machinery and equipment

  • Refinancing of qualified debt (with or without expansion)

  • Associated soft costs: appraisal fees; environmental reports; closing costs; architects fees; permits; surveys; installation of machinery and equipment; points on interim loans; small amounts of furniture and fixtures; etc.

Benefits & Advantages
Buy Vs Lease
Eligibility
Examples of
504 Projects