The SBA’s 504 Loan Program helps small business owners save capital by requiring only a 10% borrower contribution. How it works is the SBA authorizes CDCs (that’d be us here at BFC) to provide financing to small businesses with the help of third-party lenders (conventional banks). Here’s a quick primer on how it works as well as an answer to just how much you can borrow with the SBA 504:
Loan Maximum: As to the maximum loan amount, 504 Loans are generally capped at $5 million. However, certain eligible energy-efficient or manufacturing projects may qualify for more than one 504 loan up to $5.5 million each. It should also be noted that if you decide to embark on energy-related projects that fall under the “go green” heading, you can borrow substantially more. While all projects are capped at $5 million, you can ultimately borrow up to $16.5 million in lifetime dollars.
- Interest rate: Below-market interest rates are fixed for the life of the loan.
- Required equity: A low down payment (10 percent in most cases) conserves your working capital.
- Terms: 10, 20 or 25-year terms
- Use of proceeds: Long-term, fixed assets for expansion or modernization (usually real estate or large equipment). Refinancing of large equipment and/or owner-occupied commercial real estate may also be possible.