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SBA 504 Loan Program
504 is the SBA’s economic development instrument that supports American small business growth and helps communities through business expansion and job creation. The SBA 504 loan program provides longterm, fixedrate, subordinate mortgage financing for acquisition and/or renovation of capital assets including land, buildings and equipment. Virtually all types of for-profit small businesses are eligible for this program.

The SBA 504 loan is distinguished from other SBA loan programs in these ways:

  • Lower down payment; allows a business to conserve valuable operating capital by injecting just 10% of total project cost.
  • Fixed interest rate; borrower knows cost of occupancy for the next 20 years. Rate is usually below market rate.
  • All project costs can be financed, including acquisition (land and building, land and construction of building, renovations, machinery and equipment) and soft costs such as title insurance, legal, appraisal, environmental and bridge loan fees. Closing costs may be financed.
  • Collateral is typically assets financed; allows other assets to be free of liens and available to secure other needed financing.
  • Longterm: real estate loans are 20-year term, heavy equipment 10 or 20-year terms and are selfamortizing.
  • 504 program encourages banks and other lenders to make loans in first position on reasonable terms, helps them retain growing customers, and provides CRA credit.
  • 504 program benefits the borrower’s community through job creation and retention.

Businesses that receive 504 loans are:

  1. Small net worth under $6 million, net profit after taxes under $2 million, or meet other SBA size standards.
  2. ganized as forprofit.
  3. Any type of business retail, service, wholesale or manufacturing.

The SBA’s 504 lending intermediaries, Certified Development Companies (CDCs) serve your community to finance business expansion needs through 504. Its professional staff works directly with you to tailor a financing package that meets program guidelines and the credit capacity of your business. The 504 Loan Program is the first national financing program specifically designed for expanding small business whose investment will create jobs.

The Certified and Preferred Lenders Program
The most active and expert lenders qualify for the SBA’s Certified and Preferred Lenders Program. Participants are delegated partial or full authority to approve loans, which results in faster service. Certified lenders are those that have been heavily involved in regular SBA loanguaranty processing and have met certain other criteria. They receive a partial delegation of authority and are given a three-day turnaround on their applications (they may also use regular processing).

Certified lenders account for 10 percent of all SBA business loan guaranties. Preferred lenders are chosen from among the SBA’s best lenders and enjoy full delegation of lending authority. This authority must be renewed at least every two years, and the lender’s portfolio is examined by the SBA periodically. Preferred loans account for 18 percent of SBA loans. For list of certified/preferred lenders in your area contact your local SBA office.



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