• Low down payment (as little as 10%) preserves cash for working capital
• Competitive, 20 year fixed interest rate helps cap occupancy costs
• 20 year fully amortizing loan reduces monthly cash requirements
• Project financing can include both hard and soft costs (banks typically require that you fund soft costs out-of-pocket)
• Low risk for first trust lender allows for competitive pricing on that portion of the transaction

What is a 504 Loan?

The 504 Loan allows a small business to obtain a “home” (or long-term machinery & equipment) at a reasonable, 20 year fixed rate of interest with as little as 10% down.

Business Finance Group works in partnership with a bank who provides 50% of the financing in a first lien position, the 504 Loan provides up to 40% of the financing in a second lien position, and the business contributes as little as 10%.

The business must be the primary occupant (51% for an existing building and 60% for a newly constructed building) of the project real estate.

What are the terms of the 504 Loan?

• Favorable fixed rate of interest
• Low down payment (as little as 10%)
• 20 year term (ten years for machinery & equipment)
• Due to reduced risk, the first trust lender is competitive in its pricing and terms

What can my business finance with a 504 Loan?

• Land or building acquisition
• Building construction or remodeling
• Acquisition of heavy machinery & equipment
• Soft costs (appraisals, environmental studies, construction period interest, closing costs, etc.)
• Minor equipment, FF&E or fixtures purchases can be included in a real estate project

Is there a minimum or maximum project size?

504 projects typically range in size from $200,000 to $16,000,000 with the 504 Loan ranging from $50,000 to $1,500,000 ($2,000,000 when public policy goals are achieved). For a manufacturer, the 504 portion can be as large as $4,000,000. The first trust loan can exceed 50% of the project enabling larger companies to take advantage of the benefits of the 504 Loan.

What are the requirements to qualify for a 504 Loan?

Most privately held, for-profit companies are considered “small” businesses for 504 financing purposes. As an economic development financing program, it is anticipated that the business will create or retain jobs or meet another policy goal of the 504 program.

Is it difficult to apply?

No – it’s easy to apply. As with any loan application, you will need to complete an application and provide certain information about your company and its owners. Our experienced loan officers will help make the process simple and easy. Call us at 800-305-0504 or click here to go to the “Application”.

How long is the approval process?

Once your completed application and attachments have been received, it will take one to two weeks for our loan committee to review your request. Then, your application is forwarded to the SBA who will review it in 5 to 7 business days.

Is there a pre-qualification process?

Yes – if your seller requires a pre-approval letter or if you are more comfortable negotiating a contract with a pre-approval letter in hand, we can review the financial information and provide a response in 2 business days.

Is my company too big or too successful for a 504 Loan?

504 Loans are targeted to successful, growing companies since those companies are most likely to create new jobs. New ventures may qualify for 504 financing, but generally, applicant firms need proven repayment ability. Most privately held companies are not too large to qualify for 504 financing.

How does a 504 Loan compare to a 7(a) loan?

Both are SBA guaranteed loans. The 504 Loan is a low down payment, fixed rate, long term loan to assist a growing business to acquire a larger facility or more equipment. While the 7(a) loan can also be used to finance those costs, the down payment is generally higher and the interest rate typically floats at a higher rate. Hence, the total cost of a 7(a) loan to the company can be significantly higher than the cost of a 504 Loan. Our loan officers can provide you with a detailed cost comparison for your project.