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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.

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