SBA Lending
SBA 504 Program
The SBA 504 Loan Program is an economic development program designed to finance fixed assets for small businesses on reasonable terms and to stimulate employment. In other words, to assist entrepreneurs in obtaining long-term financing for capital assets, like the purchase of real estate, costly equipment or any other fixed asset. Recognizing that small business owners sometimes have difficulty obtaining traditional business financing to fuel growth opportunities, an SBA 504 loan allows entrepreneurs to make the investment in their own facilities, continue to expand and subsequently create new jobs.
What are the primary advantages to businesses and business owners?
- Lower down payment requirements (as little as 10%)
- A 20-year, below market, fixed interest rate (on the SBA portion)
Who’s Eligible?
- For-profit businesses
- Small to medium sized businesses
- Owner-users that occupy a minimum of 51% of the usable square footage of an existing building or 60% of newly constructed space acquired with loan proceeds
Allowable uses of Loan Proceeds:
- Acquisition of land for construction
- Acquisition of existing land and building
- Building construction and/or renovation
- Accusation of machinery & equipment
- Associated soft costs: architectural fees, engineering, surveys, appraisals, etc.
Typical project structure:
Project Costs:
Land Purchase Building Construction Machinery Soft Costs
Total Project Costs |
$200,000 $700,000 $75,000 $25,000
$1,000,000 |
Project Sources:
Midtown Bank 1st Mortgage SBA 504 Direct 2nd Mortgage Required Minimum Borrower Equity
Total Sources |
$500,000 $400,000 $100,000
$1,000,000 |
Note: The maximum amount of an SBA 504 2nd Mortgage Loan is $5,000,000.
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