WHAT IS THE SBA 504 LOAN PROGRAM?
The SBA 504 loan program designed for fixed asset purchases or construction. Under this program, the borrower must inject a minimum of 10% down of eligible project costs (5% additional injection is required for either a startup or special-purpose building). A private lender, (bank, credit union, or other financial institution, e.g. PMC) makes a first lien loan for 50% of the eligible project costs. The SBA then guarantees 100% of a second lien to a Certified Development Company located in your state for the remainder of the 30-40% of the eligible project cost. Refinancing (except for land loans for construction projects in some cases) is not eligible under this program. Land, building, large or essential equipment, plus necessary soft costs; e.g. architects, permits, interim interest, etc. are eligible. The primary ineligible costs are inventory, franchise fee, and working capital. For more information, call us or visit www.sba.gov.
