SBA 504 Loans
Loans are given through private-sector lenders.
- The SBA DOES NOT have GRANTS for small businesses.
- Interest rates are at or above typical rates for commercial loans.
- SBA Loans offer longer amortization rates than most commercial loans:
- Working Capital loans: up to 7 years
- Fixed asset loans: up to 25 years
The Small Business Applicant must:
- Be an operating business, be organized “for profit” (legal entity- corporation, partnership, sole proprietor, limited liability and located within the U.S.
- All owners with 20% ownership or more must give a personal guarantee.
- Meet SBA size standards which are:
- The small business applicant and its affiliates must have:
- A tangible net worth of $15 million or less and
- An average net income after federal income taxes (excluding any carry-over losses) for the preceding two completed fiscal years of $5.0 million or less.
- Meet job creation goals of the program (currently 1 job for every $65,000 of the SBA debenture)
- Meet Occupancy Requirements which are:
- If the project is to purchase an existing building, the small business MUST occupy at least 51%
- If the project is to construct a new building, the small business must occupy 60% of the rentable space
- Multiple borrowers may partner to occupy the required percentage
- Unused space can be leased out with leasehold income considered in determining repayment ability