SBA 504 Loan Program
The SBA 504 loan program is an ideal way to save much-needed working capital when making a fixed-asset acquisition. With an SBA 504 loan you can finance up to 90 percent of the project's total cost and lock into a low 20-year fixed rate.
With the SBA 504 loan and its low 10 percent down payment provision, a business owner can retain additional funds to help cover a number of unforeseen expenses that may result from such a move. In addition, most of these acquisitions are a direct result of increased business opportunities. The lower equity injection keeps cash available to help support the continued expansion of the business.
For example, a $500,000 investment in a new building will allow the owner to save $50,000 in equity (versus the typical $100,000 required under conventional financing) that can then be used for a number of business related needs.
Examples of Fixed-Assets Eligible for an SBA 504 Loan
Nearly any project involving the purchase, construction or improvement of fixed assets is eligible for SBA 504 financing:
- Land acquisition
- Building acquisition
- Building renovation
- Building construction
- Purchase of heavy machinery and equipment (new or used)
Eligibility Criteria
Almost any type of business is eligible: manufacturer, distributor, retailer, service company, etc. Startups as well as existing businesses are eligible.
Business Benefits of an SBA 504 Loan
- Low down payment - usually 10 percent
- Preserve your company's cash for working capital
- Competitive interest rate - don't pay more than necessary
- Fixed-interest rate for the term of the loan - typically 20 years
- Locked-in rate allows your company to better protect against interest rate fluctuations
- Asset may be owned by a "passive entity" and leased by the operating company - position yourself for an additional tax benefit
- Financing that fits project sizes from $125,000 and up - the financing flexibility your growing company needs
How a Project is Typically Funded
- Bank: 50 percent of project's total cost
- SBA: 40 percent of project's total cost
- You/Your Company: 10 percent down payment
For more information, please contact Steve Grelle at 314.615.7681.
SBA Note and Effective Rates
SBA 504 Loan Application
SBA 504 Application Checklist
SBA 504 Brochure
SBA 504 Newsletters
