If you’re a small business in need of additional capital, the SBA’s 504 Loan Program can help your business solve and overcome a variety of obstacles to ensure your business has what it needs to grow and succeed.
To get started, you need a certified development company (that’s us at BFC) to help you determine whether you are eligible and help guide you through the funding process. Which if you aren’t aware, can be broken down into three separate funding elements:
The commercial lender: the first part of any SBA 504 loan comes from a commercial lender, who typically offers up to 50% of the total loan amount.
The CDC, backed by the SBA: the second component is a loan from the CDC, guaranteed by the SBA. This will amount up to 40% of the total loan amount.
The business owner: the remaining 10% (an equity investment) is put up by the small business owner.
There’s specific criteria (such as owning a for-profit business in the US) that a business must adhere to qualify for the SBA 504 Loan Program. Additional requirements include having a net worth less than $15 million, an average net income of less than $5 million and occupying at least 51% of the space the business space that is intended for purchase.
There are additional qualifications that require showing proof that you will be using the loan for it’s intended purpose as well. AT BFC, we’re here to help determine if the SBA 504 is a proper fit for your business.
How can the 504 loan be used?
In most cases, you can use the funds towards helping your small business purchase of land, property and heavy equipment. This may include: