Business Finance Capital, a California-based Certified Development Company (CDC) administers SBA 504 Loans on behalf of the Small Business Administration. The loan is particularly attractive to small business owners because it features a below market, long term FIXED rate and only requires a 10% down payment.
The requirements to qualify for an SBA 504 Loan starts with one basic tenant: You need to have a for-profit business based in the US.
If that’s you, that’s a good start! Additional requirements are as followed:
- 51% Occupancy: The applicant must occupy at minimum, 51% of the property being purchased with funds provided by the loan. For new construction, applicants must occupy at least 60% of the property.
Loan funds can be used to:
- Purchase land
- Purchase existing buildings
- Purchase long-term machinery and equipment
- Purchase improvements (including grading, street improvements, utilities, parking lots and landscaping) or Build new facilities or modernize, renovate or convert existing facilities.
A 504 Loan cannot be used for:
- Working capital or inventory
- Speculation or investment in rental real estate.
What are the amounts and repayment terms?
Maximum loan amounts are determined by how they’ll be used – if they support goals associated with job creation, public policy or small manufacturing. The loan terms also vary. For land and buildings, the loan term is 20 years; it’s a 10-year term for machinery and equipment.
To learn more about the SBA 504 Loan, your qualifications, and what it means to have a business associated with job creation and helping your local economy, give us a call (1-800-SBA-REAL) and talk to one of our SBA 504 Loan experts today.