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
- Tangible Net Worth less than $15 million
- Average net income less than $5 million (2 year average)
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
- $5,000,000 for standard eligibility projects
- $5,000,000 for manufacturering eligibility projects
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
- $2,500 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
- $4,500 document preparation fees; included in the loan amount and paid over the term of the loan
Contact Eric Fischer 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.
