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Economic Development > Financing > SBA 504

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Business Financing

SBA 504

The SBA 504 loan program is the U.S. Small Business Administration's long-term financing tool for economic development. The 504 Program provides growing businesses with long-term, fixed-rate financing for fixed asset projects. The program allows businesses to contribute as little as 10% equity into a project.

The typical structure of a 504 deal is as follows:

  • 50% of project financed by a bank
  • 40% of project financed by SBA 504
  • 10% equity contribution

Eligible Businesses

  • For-profit businesses
  • Tangible Net Worth less than $7 million
  • Average net income less than $2.5 million

Eligible Uses

  • Purchasing land and improvements including existing buildings
  • Grading, street improvements, utilities, parking lots, and landscaping.
  • Construction of new facilities, or modernizing, renovating or converting existing facilities
  • Purchase of long-term machinery and equipment

Amounts

  • $1,500,000 for job retention/creation projects
  • $2,000,000 for meeting public policy goals such as:
    • Business district revitalization
    • Expansion of exports
    • Expansion of minority business development
    • Rural development
    • Increasing productivity and competitiveness
    • Restructuring because of federally mandated standards or policies
    • Changes necessitated by federal budget cutbacks
    • Expansion of small business concerns owned and controlled by veterans (especially service-disabled veterans)
    • Expansion of small business concerns owned and controlled by women
  • $4,000,000 for manufacturers

Terms

  • Interest rate fixed for the term of the loan; rates are pegged to an increment above the current market rate for 5-year and 10-year U.S. Treasury issues
  • 20 years for real estate; 10 year for machinery & equipment
  • One job created or retained for every $50,000 borrowed
  • Personal guaranties of principal owners are required

Fees

  • $1,500 processing fee deposit (fully refunded at funding)
  • Other one-time, up-front fees of approximately 2.65% of the loan amount; included in the loan amount and paid over the term of the loan
  • $3,000 document preparation fees; included in the loan amount and paid over the term of the loan

Contact Melissa McLaughlin at 717.213.5042 or This e-mail address is being protected from spambots, you need JavaScript enabled to view it with any questions regarding SBA 504.

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