The Small Business Association (SBA) 504 Loan Program provides fixed-asset financing for growing businesses. It offers fixed-rate loans for real estate or heavy-duty equipment with down payments as low as 10%.
An independent agency of the federal government, the Small Business Administration aids, counsels, assists and protects the interests of small business concerns through an extensive network of field offices and partnerships with public and private organizations throughout the United States.
The SBA loan package is a partnership consisting of:
- A regulated lender (typically a bank)
- The Self-Help Ventures Fund, a component of the non-profit Self-Help organization
- The Small Business Administration (SBA)
- The business owner.
Together, they finance the project.
SBA 504 Loan structuring
A private lender provides interim financing for up to 90% of total project costs and a permanent mortgage for 50% of total project costs. Self-Help provides up to 40% of permanent financing for project costs as a 504 loan. The business owner provides as little as 10% equity injection (usually cash or land).
Who can apply?
SBA 504 Loans can be used for land or building acquisition, building construction or remodeling, heavy-duty machinery or equipment and related costs including architect fees, construction interest, legal fees, surveys appraisals, etc. Past borrowers include retail stores, professional offices, service businesses, hotels, restaurants, child care centers, recreation and entertainment facilities and more.
For more information and instructions on how to apply, visit the Self-Help Commercial Lending website.