SBA 504 Loans

The 504 loan program is an economic development program designed to finance fixed assets for small businesses on reasonable terms and to stimulate employment through a job retention/creation goal. A 504 project has three main partners and generally: a Third Party Lender provides 50% or more of the financing; a Certified Development Company (The Foster Company) provides up to 40% of the financing through a 504 debenture (guaranteed 100% by the SBA); and an applicant (borrower) injects at least 10% of the financing. New businesses, and those purchasing single purpose properties, must inject at least 15%. A list of properties the SBA deems single purpose can be found on the FAQ page.

• Down payments as little as 10% of the total project amount
• Long-term loans with up to 25-year amortizations
• Lower monthly payments than most traditional loans, offering fixed-asset financing for an entire 20-year term
• A below-market, long-term fixed interest rate, unlike those available in traditional bank loans, which may rise

SBA 504 loan program is used for purchasing, renovating, financing or constructing owner occupied/owner operated commercial real estate or buying heavy equipment.   

Expansion 

If the project involves expansion, any amount of existing indebtedness that does not exceed 100% of the cost of the expansion may be refinanced.  “Expansion” includes any project that involves the acquisition, construction or improvement of land, building or equipment for use by the applicant.  

Without Expansion  

SBA may approve a refinance project of qualified debt (commercial loan) that does not involve an expansion, however there are eligibility and loan-to-value limitations.  

These projects can cover the cost of eligible business expenses incurred prior the project.  

Recent changes allow the program to refinance government guaranteed debt provided there is a substantial benefit to the borrower. Other conditions also apply.

 We suggest you reach out to one of experience professionals should you have specific questions.  

To see if you project qualifies reach out to one of our experienced professionals.

Some of the things that the program cannot be used for include: working capital, partner buyouts, business acquisitions, franchise fees and so forth. These financing needs are better suited for our SBA 7(a) loan program.