What Is An SBA 504 Loan?
The U.S. Small Business Administration's SBA 504 Loan is a funding program designed to provide financing for the purchase of fixed assets, which usually means real estate, buildings and machinery, at below market rates. You can also use a 504 loan to build or upgrade facilities, including utilities, streets or parking lots.
SBA 504 business loan offers long-term financing of up to 25 years for major fixed assets such as real estate and machinery. Projects typically qualify for up to $5 million under the SBA 504 loan program but eligible energy-efficient or manufacturing projects can qualify for more than one loan of up to $5.5 million per project.
What are the SBA 504 loan requirements?
Additional 504 loan requirements are:
Your business must be a for-profit business. Operations must also be in the United States. Non-profits will not qualify*.
Your business must have a net worth of less than $15 million.
Your net income should be less than $5 million for two years before your application.
Your business must fall within the category of ‘small business,’ according to the definition of the SBA.
Your business must not hold any bad records on government loans, which includes federal student loans.
Your personal credit plays a part.
*The following are not eligible for an SBA 504 loan: nonprofit organizations, religious institutions, private clubs, life insurance companies, and businesses that engage in legal gambling, lending, and lobbying.