SBA 504 Loans

March 10th, 2016

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

Eligibility Criteria
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

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