SBA 504 Loans


What is a SBA 504 loan?

 

The SBA 504 Loan is a long-term, fixed-rate financing tool designed to support the growth and job creation of small businesses. It is facilitated through Certified Development Companies (CDCs), which are SBA’s community-based partners.
The program focuses on financing major fixed assets like real estate or large equipment that can promote business expansion and modernization

What are the criteria required to qualify for SBA 504 loans?

To qualify for an SBA 504 loan, businesses must meet the following criteria:
  • 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 the application.
  • Fall within the SBA size guidelines .
  • Possess qualified management expertise , a feasible business plan, good character, and the ability to repay the loan

Which businesses are ineligible for SBA 504 loans?
According to the SBA, the following are ineligible for 504 loan assistance –

  • Non-profit businesses (for-profit subsidiaries are eligible).
  • Financial businesses primarily engaged in lending, such as banks and finance companies.
  • Passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired with the loan proceeds.
  • Life insurance companies.
  • Businesses located in a foreign country.
  • Businesses deriving more than one-third of gross annual revenue from legal gambling activities.
  • Businesses engaged in any illegal activity under federal, state, or local law

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